TRIS Rating Co., Ltd. has affirmed the “AA” rating with “stable” outlook for the Bt4,000 million depository receipts on The Bangchak Petroleum PLC’s (BCP) subordinated convertible debentures (BCP141A) of Siam DR Co., Ltd. (SIAMDR). The rating reflects the credit support, in terms of principal protection, provided by the Ministry of Finance (MOF) to buy back the issue at the original offering price should the underlying issuer, BCP, be unable to make its scheduled payments on time, the underlying issuer’s credit quality, and the additional security elements embedded into the transaction structure itself.
The “stable” outlook for SIAMDR’s depository receipts derives from the principal protection from the MOF and the credit quality of BCP itself. The rating of this issue may be revised if there is a significant change in BCP’s credit quality.
TRIS Rating reported that BCP’s credit quality is related to the support from PTT PLC (PTT) and the progress of BCP’s refinery improvement programs. However, these benefits are partially offset by the constraints of BCP’s existing refinery and the inherent fluctuations in oil prices and gross refining margins. The credit assessment also takes into consideration BCP’s improved capital structure, following its financial restructuring and the good prospects for oil demand.
TRIS Rating said, BCP’s operating performance in 2005 and the first quarter of 2006 was satisfactory. Although its refinery utilization reduced from 74% in 2004 to approximately 50% in 2005 and the first quarter of 2006, BCP’s gross refining margin averaged US$3.45 per barrel, double the margin obtained in 2004. However, BCP’s marketing margin declined significantly from Bt1.30/liter in 2004 to Bt0.72/liter in 2005 before improving slightly to Bt0.98/liter in the first quarter of 2006. BCP’s financial performance in 2005 remained favorable as its operating margin remained at the 2004 level of 4.7%. In the first quarter of 2006, operating margin declined to 2.38%.
A US$378 million investment in BCP’s new hydrocracker is expected to alleviate the company’s refinery limitations and yield more highly-valued refined products. With a conservative financing scheme of 56% debt financing for the new cracker project, BCP’s leverage is expected to increase slightly during the construction period, said TRIS Rating. -- End
Siam DR Co., Ltd. (SIAMDR)
Issue Rating:
BCP141A: Bt4,000 million depository receipts on The Bangchak Petroleum PLC’s Affirmed at AA
subordinated convertible debentures due 2014
Rating Outlook: Stable
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Copyright 2006, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.
The “stable” outlook for SIAMDR’s depository receipts derives from the principal protection from the MOF and the credit quality of BCP itself. The rating of this issue may be revised if there is a significant change in BCP’s credit quality.
TRIS Rating reported that BCP’s credit quality is related to the support from PTT PLC (PTT) and the progress of BCP’s refinery improvement programs. However, these benefits are partially offset by the constraints of BCP’s existing refinery and the inherent fluctuations in oil prices and gross refining margins. The credit assessment also takes into consideration BCP’s improved capital structure, following its financial restructuring and the good prospects for oil demand.
TRIS Rating said, BCP’s operating performance in 2005 and the first quarter of 2006 was satisfactory. Although its refinery utilization reduced from 74% in 2004 to approximately 50% in 2005 and the first quarter of 2006, BCP’s gross refining margin averaged US$3.45 per barrel, double the margin obtained in 2004. However, BCP’s marketing margin declined significantly from Bt1.30/liter in 2004 to Bt0.72/liter in 2005 before improving slightly to Bt0.98/liter in the first quarter of 2006. BCP’s financial performance in 2005 remained favorable as its operating margin remained at the 2004 level of 4.7%. In the first quarter of 2006, operating margin declined to 2.38%.
A US$378 million investment in BCP’s new hydrocracker is expected to alleviate the company’s refinery limitations and yield more highly-valued refined products. With a conservative financing scheme of 56% debt financing for the new cracker project, BCP’s leverage is expected to increase slightly during the construction period, said TRIS Rating. -- End
Siam DR Co., Ltd. (SIAMDR)
Issue Rating:
BCP141A: Bt4,000 million depository receipts on The Bangchak Petroleum PLC’s Affirmed at AA
subordinated convertible debentures due 2014
Rating Outlook: Stable
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Copyright 2006, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.