Fitch Affirms Minor International#s USD Guaranteed Securities# #BBB+# Rating

Stocks and Financial Services Press Releases Friday November 29, 2019 11:49
Bangkok--29 Nov--Fitch Ratings
Fitch Ratings has affirmed the 'BBB+' rating on Minor International Public Company Limited's (MINT) USD300 million guaranteed senior perpetual capital securities.
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 reflect the credit enhancement provided to investors by the unconditional and irrevocable guarantee from BBL acting through its Singapore branch; the guarantee ranks pari passu 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 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 12 April 2019:
IDRS, NATIONAL RATINGS AND SENIOR DEBT
The IDRs, National Ratings and ratings on the senior debt of BBL are sensitive to changes in its standalone profile as indicated by its Viability Rating (VR).

The National Ratings of BBL are also sensitive to changes in relative creditworthiness among Thai peers. For example, BBL's National Long-Term Rating may be upgraded if the bank's key financial metrics such as capital and liquidity show sustained improvement relative to Thai peers, even if its VR remains the same.

VIABILITY RATING

There is unlikely to be upside to the VR on BBL in the near term. The rating is at the same level as the Thai sovereign's Long-Term Foreign-Currency IDR (BBB+/Positive), and the bank has a substantial exposure to sovereign bonds. For this reason, a downgrade of the sovereign's Long-Term Foreign-Currency IDR could result in a similar rating action for the VR on BBL.

Substantial deterioration in profitability and asset quality to below 'bbb' category standards and that eclipse BBL's strong buffers could trigger a VR downgrade.

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