TRIS Rating Co., Ltd. has affirmed the issuer rating to Bangkok Metropolitan Administration (BMA) at “AA+” with “stable” outlook. The rating is based on the strategic position of the Bangkok Metropolis (Bangkok) as Thailand’s administrative and economic center and continual economic growth. The rating also reflects BMA’s reliable tax revenue, consistently sound budgetary performance, and a strong financial profile due to its almost debt-free position. The rating, however, is constrained by the restriction from seeking additional revenue sources, despite the huge demand for capital investment for public transportation and infrastructure, and an increasing financial burden from assuming public services delegated from the central government under a decentralization plan. The BMA’s relationship with the central government, the timeliness of audited financial report, and the absence of a concrete debt management framework, which BMA should achieve prior to raising debt in the future, need to be monitored.
The “stable” outlook reflects BMA’s reliable revenue sources and conservative budgetary policy. TRIS Rating expects that there will be no material adverse affect from the relationship with the central government. At the same time, BMA should continue to exercise proper financial discipline to ensure sound budgetary performance and a robust financial profile. Leverage, if incurred in the future for capital investment, should be well planned to match BMA’s revenue and debt service ability.
TRIS Rating reported that BMA is a local government organization and has the responsibility of providing public services for both residents and businesses in Bangkok. As the capital city of Thailand, Bangkok benefits from its position as the social, political and economic center of the country. In 2007, the Gross Provincial Product (GPP) of Bangkok was the highest in the country, amounting to Bt2,191,811 million or 26% of Thailand’s Gross Domestic Product (GDP). During the last five years, approximately 93%-97% of BMA’s total revenue was from taxes, both local taxes collected by BMA (20%) and allocated taxes collected by other governmental agencies and contributed to BMA (73%-77%). The major component of local taxes is property tax, which accounts for over 90% of total local taxes. Almost half of allocated taxes are derived from value added tax, while automobile tax and land transfer fees account for 20% each. Tax revenue is considered a highly reliable source of income for BMA, although the amount varies with the country’s economy. Thailand’s economy is projected to continue growing in the near term amid an uncertain political situation and increasing inflation. BMA’s financial profile is very strong, due to a balanced budget policy, which results in a conservative expenditure plan, and its almost debt-free position.
TRIS Rating said that, in general, Bangkok is the most developed city in Thailand. However, more investment in public services and infrastructure is needed to serve the expanding population and to facilitate economic growth. Public services, including new projects initiated by BMA and the responsibilities transferred from the central government, require a large amount of funds for project development and ongoing expenditures. In addition to tax revenue allocation, the central government also granted BMA a subsidy on an annual basis. However, these funding sources are somewhat limited and are not sufficient to fund capital-intensive projects. Currently, BMA’s management is studying the possibility of seeking funding through the capital market to provide it with more flexibility to finance large infrastructure projects. Incurring new debt in the future may increase the financial risk and weaken BMA’s financial strength. As BMA has not yet established an official debt management framework, TRIS Rating will closely monitor BMA’s access to the financial market and its ability to structure and manage future funding. -- End
Bangkok Metropolitan Administration (BMA)
Issuer Rating: Affirmed at AA+
Rating Outlook: Stable
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Copyright 2008, 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 omissi
The “stable” outlook reflects BMA’s reliable revenue sources and conservative budgetary policy. TRIS Rating expects that there will be no material adverse affect from the relationship with the central government. At the same time, BMA should continue to exercise proper financial discipline to ensure sound budgetary performance and a robust financial profile. Leverage, if incurred in the future for capital investment, should be well planned to match BMA’s revenue and debt service ability.
TRIS Rating reported that BMA is a local government organization and has the responsibility of providing public services for both residents and businesses in Bangkok. As the capital city of Thailand, Bangkok benefits from its position as the social, political and economic center of the country. In 2007, the Gross Provincial Product (GPP) of Bangkok was the highest in the country, amounting to Bt2,191,811 million or 26% of Thailand’s Gross Domestic Product (GDP). During the last five years, approximately 93%-97% of BMA’s total revenue was from taxes, both local taxes collected by BMA (20%) and allocated taxes collected by other governmental agencies and contributed to BMA (73%-77%). The major component of local taxes is property tax, which accounts for over 90% of total local taxes. Almost half of allocated taxes are derived from value added tax, while automobile tax and land transfer fees account for 20% each. Tax revenue is considered a highly reliable source of income for BMA, although the amount varies with the country’s economy. Thailand’s economy is projected to continue growing in the near term amid an uncertain political situation and increasing inflation. BMA’s financial profile is very strong, due to a balanced budget policy, which results in a conservative expenditure plan, and its almost debt-free position.
TRIS Rating said that, in general, Bangkok is the most developed city in Thailand. However, more investment in public services and infrastructure is needed to serve the expanding population and to facilitate economic growth. Public services, including new projects initiated by BMA and the responsibilities transferred from the central government, require a large amount of funds for project development and ongoing expenditures. In addition to tax revenue allocation, the central government also granted BMA a subsidy on an annual basis. However, these funding sources are somewhat limited and are not sufficient to fund capital-intensive projects. Currently, BMA’s management is studying the possibility of seeking funding through the capital market to provide it with more flexibility to finance large infrastructure projects. Incurring new debt in the future may increase the financial risk and weaken BMA’s financial strength. As BMA has not yet established an official debt management framework, TRIS Rating will closely monitor BMA’s access to the financial market and its ability to structure and manage future funding. -- End
Bangkok Metropolitan Administration (BMA)
Issuer Rating: Affirmed at AA+
Rating Outlook: Stable
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Copyright 2008, 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 omissi