Fitch Affirms Mercedes-Benz (Thailand)#s MTN Programmes at #AAA(tha)#

Stocks and Financial Services Press Releases Monday July 23, 2018 17:13
Bangkok--23 Jul--Fitch Ratings

Fitch Ratings (Thailand) Limited has affirmed the National Long-Term Rating on Mercedes-Benz (Thailand) Limited's (MBTh) medium-term note (MTN) programme of up to THB15 billion (MTN-2) and its THB10 billion MTN programme (MTN-1) at 'AAA(tha)'. The Outlook is Stable. At the same time, the agency has affirmed MBTh's existing THB9.7 billion guaranteed debentures under the programmes at 'AAA(tha)' with a Stable Outlook. The debentures under the MTN programmes are guaranteed by MBTh's parent, Daimler AG (A-/Stable).

Fitch acknowledges that MTN-1 has fully reached its notional limit of THB10 billion and will longer have debenture issuance under this programme. However, the affirmation of MTN-1's rating is to support the existing debentures under this programme, which will mature in February 2019.

KEY RATING DRIVERS

Guaranteed by Daimler: The ratings of the MTN programmes are based solely on the full, irrevocable and unconditional guarantee provided by Daimler. The parent's Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'A-' is higher than Thailand's Long-Term Local-Currency IDR of 'BBB+'. As a result, the National Rating on the guaranteed medium-term debenture programmes is at the highest end of Thailand's National Rating scale.

Strong Relationship with Daimler: MBTh is 100% owned by Daimler, with which it has strong operational and financial links. MBTh imports both completely built-up vehicles and completely knocked-down kits from Daimler for local assembly and distribution. MBTh also strictly complies with the group's treasury policy.

Luxury Car Leader: MBTh is one of the leaders in Thailand's premium-car market with a market share, in terms of unit sales, of above 50% in 2017. The company also provides hire-purchase and leasing services through its wholly owned leasing subsidiary, Mercedes-Benz Leasing (Thailand) Company Limited (MBLT).

DERIVATION SUMMARY
The ratings of MBTh's guaranteed medium-term debentures programmes are based entirely on the full, irrevocable and unconditional guarantee provided by Daimler.
KEY ASSUMPTIONS
N/A
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to Negative Rating Action
-The guaranteed MTNs could be downgraded if Daimler's Long-Term Foreign-Currency IDR falls below Thailand's Long-Term Local-Currency IDR.
The rating of MBTh's guaranteed MTNs are at the highest end of the National Rating scale, therefore there is no potential rating upside.
LIQUIDITY

Reducing Debt: MBTh's consolidated debt decreased to THB25.9 billion by end-2017 from THB31.4 billion at end-2016, due to stronger cash flow generation. MBTh's external debt as of end-2017 consisted of bank loans (55%) and Thai baht debentures (45%), all guaranteed by Daimler. This was mainly used to finance MBLT's business.

Manageable Liquidity: The company has THB12.4 billion of debt that will mature in 2018. This will be partly covered by cash on hand of THB1.3 billion and available uncommitted credit facilities of THB17.2 billion at end-2017. MBTh also has good access to additional credit facilities and capital markets as it is backed by a strong parent.


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