Fitch Assigns Minor International#s USD Guaranteed Securities Final #BBB+# Rating

Stocks and Financial Services Press Releases Friday December 7, 2018 14:48
Bangkok--7 Dec--Fitch Ratings
Fitch Ratings has assigned Minor International Public Company Limited's (MINT) USD300 million guaranteed senior perpetual capital securities a final rating of 'BBB+'.

The final rating is in line with the expected rating assigned on 23 November 2018 and follows the receipt of final documents conforming to information already received and a signed certificate of authentication of the notes.

KEY RATING DRIVERS

Driven by Guarantor's Rating: The notes are rated at the same level as the Long-Term Issuer Default Rating (IDR) of the guarantor, Bangkok Bank Public Company Limited (BBL; BBB+/Stable), to reflects the credit enhancement provided to investors by the unconditional and irrevocable guarantee from BBL acting through its Singapore branch; the guarantee ranks pari pasu with BBL's unsecured and unsubordinated obligations.

The guarantee will be in full effect until the earlier of the payment of all sums payable in respect of the securities having been paid in full and the first call date in 2021. Should MINT not call the notes on the call date in 2021 (non-call event), the guarantor is required to purchase the notes at a price that covers the principal amount, accrued interest, any deferred interest, and interest on interest deferred. In addition to the mandatory purchase on a non-call event, if MINT goes into bankruptcy before the first call date, BBL will also be obliged to purchase the notes at a price that is calculated on the same basis as above.

Fitch sees the notes' first call date as the effective maturity date. The total guarantee amount from BBL is limited to a maximum of 120% of the principal of the proposed notes. This is deemed sufficient to cover the principal and potential accrued, deferred and interest on deferred interest of the notes that can be accumulated during this period.

DERIVATION SUMMARY
The rating on MINT's guaranteed notes is based solely on the unconditional and irrevocable guarantee from BBL.
KEY ASSUMPTIONS
Not applicable.
RATING SENSITIVITIES
A change in BBL's ratings would result in an equivalent change in the rating on MINT's notes since the rating on the credit-enhanced notes is based solely on BBL's guarantee.
For the ratings of BBL, the following sensitivities were outlined by Fitch in its rating action commentary dated 2 May 2018:
The IDR of BBL is sensitive to changes in its standalone profile as indicated by its Viability Rating (VR) of 'bbb+'.

There is unlikely to be upside to the VR on BBL in the near term. The rating is already at the same level as the Thai sovereign's Long-Term Foreign-Currency IDR (BBB+/Stable), and the bank has substantial exposure to sovereign bonds. A downgrade of the sovereign's Long-Term Foreign-Currency IDR could result in a similar rating action for the VR on BBL. A significant and sustained deterioration beyond Fitch's expectations in either asset quality or profitability (including much higher risk appetite, which could raise the prospects for future deterioration) without adequate buffers in terms of loan loss reserves and capitalisation could lead to a negative rating action on its VR.

Fitch may re-assess the 'BBB-' Support Rating Floor (SRF) on BBL if the government's ability to provide support to the bank diminishes. This may happen if the agency downgrades Thailand's Long-Term Foreign-Currency IDR. The SRF could change if Fitch changes its view on the propensity of the state to provide support to the systemically important bank. However, Fitch does not expect such changes over the medium term.

LIQUIDITY
Not applicable

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