กรุงเทพฯ--6 ต.ค.--Fitch Ratings
Fitch Ratings (Thailand) Limited has today assigned National Long-term ratings of ‘AAA(tha)’ to two new tranches of PTT Public Company Limited’s (PTT) 5-year and 7-year unsecured and unsubordinated debentures, totaling up to THB10bn.
The ratings reflect PTT’s dominance in the gas and oil business in Thailand, as well as its strategic importance and function as a policy vehicle for the country’s energy security and development. Fitch views that PTT is very likely to maintain its natural monopoly in gas transmission and distribution through its established pipeline network and its long-term lease on the gas pipeline, helped further by a secure demand via its long-term sales contracts and the high barriers of entry to its capital-intensive business. Through its subsidiary, PTT Exploration and Production (PTTEP), PTT is one of Thailand’s major exploration and production companies, with the country’s largest reserves and second-largest production. PTT also off-takes and resells virtually all of Thailand’s natural gas, and has the largest market share of LPG and oil sales.
PTT’s ratings are also supported by its good management track record and solid cash flow generating capability. The gas interests are the main contributor to its EBITDA, and cash flows from this activity have proven relatively stable, thanks to long-term supply and sales agreements with minimum take-or-pay conditions, a cost-plus pricing structure and generally less volatile gas prices relative to oil prices. The ratings also reflect the state’s implicit support for PTT, which has resulted in the ratings being uplifted by one notch from their stand-alone level. The implicit support is based on the state’s majority ownership, the size, importance of PTT’s activities to Thailand and the company’s near-monopoly position in the local natural gas industry.
Nevertheless, the company’s credit profile is tempered by its vulnerability to fluctuation in commodity prices, significant budgeted capital expenditure, exposure to regulatory and political risks, as well as some foreign exchange risk. Fitch also notes that PTT has budgeted THB241bn for its five-year investment plan (2008-2012). With a continuing large capex plan, the company’s net debt and leverage are expected to increase but its financial position and liquidity should remain strong and in line with its financial policy, targeting a net debt/EBITDA ratio of below 2.0x.
The Stable Outlook reflects Fitch’s expectation that PTT will maintain its very strong market positions, particularly in the gas business, its financial profile will be kept consistent with the current ratings throughout the industry cycle, and that the government maintains a majority stake.
PTT is the only fully-integrated oil and gas company in Thailand. PTT was partially privatised and listed on the Stock Exchange of Thailand in 2001. Thailand’s Ministry of Finance holds a 52% stake, and an additional 15% indirectly via Vayupak Fund 1, a state fund. PTT is the largest company on the Thai stock market, with a market capitalisation of THB643bn at end-September 2008.
Contacts: Lertchai Kochareonrattanakul, Bangkok, +662 655 4760; Steve Durose, Sydney, +612 8256 0307; Vincent Milton, Bangkok, +662 655 4759.