Fitch Affirms BAM at #AA-(tha)#; Outlook Negative

Stocks and Financial Services Press Releases Friday August 17, 2018 18:52
Bangkok--17 Aug--Fitch Ratings
Fitch Ratings (Thailand) has affirmed Bangkok Commercial Asset Management Public Company Limited's (BAM) National Long-Term Rating at 'AA-(tha)' with a Negative Outlook.
A full list of rating action is at the end of this commentary.
KEY RATING DRIVERS

BAM's ratings are driven by sovereign support. BAM is fully owned by the Financial Institutions Development Fund (FIDF), which is a unit of the Bank of Thailand. BAM was established in 1998 to manage distressed assets arising from a financial crisis, although its policy role has gradually diminished as Thailand's financial sector has recovered. Nonetheless, BAM still plays an important role as the country's largest distressed asset manager, with sound operating performance and consistent profitability. BAM has benefitted from ongoing state support, as evident by regulatory advantages, such as its notes being classified as liquid assets as well as tax exemptions. This supports BAM's funding ability and profitability.

The Negative Outlook reflects FIDF's plan to privatise BAM through a stock-exchange listing. Fitch believes the listing may take place in the near term as the process has been ongoing since 2014. Full details and timelines have not been disclosed, but the privatisation plan continues to progress and suggests the state does not see BAM as a long-term core holding. It is possible that BAM's regulatory advantages will be removed after the listing.

BAM's senior bonds are rated at the same level as its National Long-Term Rating as they represent its unsubordinated and unsecured obligations.
RATING SENSITIVITIES

Changes in shareholding structure are likely to negatively affect BAM's ratings. The extent of the downgrade would depend on BAM's continued linkage with the state and level of ownership. Fitch would rate BAM on a standalone basis if the state's shareholding fell below 50% and BAM's regulatory advantages were removed, as extraordinary support from the government could not be relied upon. This could see BAM's National Long-Term Rating downgraded by multiple notches. The final rating would also depend on Fitch's expectations for BAM's leverage and overall financial profile.

A reversal of the plan to partially privatise BAM and signs of a long-term commitment by the state to maintain its shareholding in BAM and BAM's regulatory advantages would lead to a revision of the Outlook to Stable and a possible re-assessment of the National Long-Term Rating. Delays or signs of increasing uncertainty in the listing timeline beyond Fitch's typical rating horizon could lead to a reassessment of the rating and Outlook.

Any changes to BAM's National Long-Term Rating will have a similar effect on the issue ratings.
The rating actions are as follows:
National Long-Term Rating affirmed at 'AA-(tha)'; Outlook Negative
National Short-Term Rating affirmed at 'F1+(tha)'
National Long-Term Rating on outstanding senior unsecured bonds affirmed at 'AA-(tha)'

Latest Press Release

Photo Release: KBank joins forces with Electronics Extreme for online gaming top-up via K-Payment Gateway

Mr. Akaranant Thitasirivit (third from right), KBank First Senior Vice President, and Mr. Thanin Piromward (third from left), Chief Executive Officer of Electronics Extreme Co., Ltd., Thailand's leading provider of online games including Ragnarok Online,...

Photo Release: EXIM Thailand Joins Berne Union Spring Meeting 2019

Mr. Pisit Serewiwattana (third right), President of Export-Import Bank of Thailand (EXIM Thailand) and EXIM Thailand's executives recently presented export direct lending and outlook for CLMV market as well as discussing various issues with more than 80...

Thanachart Bank posts strong first quarter profit growth

Thanachart Bank Public Company Limited reported net profit of 3,650 million baht for the three months ending 31 March 2019, with pre-tax earnings increasing 18.7% compared to the same period last year. Mr. Praphan Anupongongarch, CEO and President of...

Bangkok Bank reports first quarter 2019 net profit of Baht 9,028 million

Thailand's economic growth in 2019 is expected to be 3.8 percent, decreasing from 4.1 percent in 2018. Amid slower world trade and risks from the US trade policies, exports declined for the first two months of the year. This has squeezed manufacturing...

KASIKORNBANK announces the first quarter of 2019 net profit of Baht 10,044 Million

Mr. Predee Daochai, President of KASIKORNBANK, said although domestic economic activities continued to grow during the first quarter of 2019, the overall economic recovery remained weak on the back of the slowing growth in the export and tourism sectors...

Related Topics