KEY RATING DRIVERS
- The National Short-Term Rating of 'B(tha)' for the upcoming subordinated debentures is derived from the implied National Long-Term Rating of 'BB-(tha)' based on the rating correspondence table in Fitch's Short-Term Rating Criteria.
- The implied National Long-Term Rating of the subordinated debentures of 'BB-(tha)' is one notch below KTBST's National Long-Term Rating of 'BB(tha)' to reflect the subordinated debentures' higher loss-severity risk relative to senior unsecured instruments, as per Fitch's Corporate Hybrids Treatment and Notching Criteria.
This arises from the debentures' subordinated status, as subordinated noteholders rank after senior creditors in the priority of claims. Additional notching has not been applied due to the lack of going-concern loss-absorption and equity-conversion features.
By Fitch's rating definition, a National Short-Term Rating of 'B(tha)' indicates an uncertain capacity for timely payment of financial commitments relative to other issuers or obligations in the same country.
RATING SENSITIVITIES
- The National Short-Term Rating of the subordinated debentures is sensitive to the change in KTBST's National Long-Term Rating, which is the anchor rating. However, that is unlikely to occur in the short-term as the change has to be in multiple notches, and KTBST's National Long-Term Rating is on Stable Outlook.
- KTBST's National Ratings are based on its standalone financial profile and reflect its small domestic franchise. The ratings also take into account KTBST's small capital base and higher leverage relative to Fitch-rated peers. The company remains exposed to funding and liquidity risk over the medium-term due to its unproven funding stability and limited history of capital-market access. Nonetheless, funding and liquidity risk over the short-term could be mitigated by KTBST's liquid assets and available credit lines.
For more details on KTBST's key rating drivers and sensitivities, see "Fitch Affirms KTB Securities (Thailand) at 'BB(tha)'; Outlook Stable" (fitchratings.com/site/pr/10081230), dated 3 July 2019.
Additional information is available on www.fitchratings.com