The proceeds will be used to refinance existing debt, fund capex and support working capital.
RATING RATIONALE
The proposed debentures are rated at the same level of BEM's National Long-Term Rating, as they constitute its direct, unsecured, unconditional and unsubordinated obligations.
BEM's rating reflects the strategic importance of its expressway and metro networks, which provide vital connections between Bangkok's major central business districts and expanding suburban economic and residential zones. BEM also benefits from asset and traffic diversification. We expect the metro business to drive earnings growth, while the more established expressway volume should generate stable earnings. However, the complexity of the metro operation moderates BEM's overall risk profile. BEM's rating also benefits from the long remaining concession lives of its assets.
These factors are balanced by development risk, volume ramp-up risk and our expectation of a temporary increase in leverage between 2028 and 2032 as BEM undertakes greenfield investments. BEM's rating also reflects its moderate financial profile over the medium to long term, with metrics weakening temporarily during the peak of its greenfield investments. Nevertheless, we believe the investments will support robust long-term traffic and ridership growth, underpinned by sustained economic activity as well as commercial and residential development.
The expansion of Bangkok's mass-transit system should boost ridership at interchange points with BEM's metro lines, supporting growth prospects for its metro operations.
KEY RATING DRIVERS
Revenue Risk - Volume - High Midrange
BEM has a portfolio of strategic and mature concession assets located in the capital city of Bangkok. These include expressways and metro systems, which benefit t from significant entry barriers, limited competition and a resilient commuter base aided by rising urbanisation. However, our factor assessment is moderated by a slowdown in leisure traffic c and changes in toll-user behaviour, particularly due to the increased adoption of remote working practices. As a result, traffic c still falls short of pre-pandemic levels.
We believe the lift in long-term ridership and revenue growth from the under-construction MRT Orange Line will be slower than BEM expects. However, the MRT Purple Line should provide predictable cash flow, as revenue comes from a cost-plus operations and maintenance (O&M) contract with the Mass Rapid Transit Authority of Thailand (MRTA), insulating it from volume risk. We forecast revenue from the commercial development segment, including retail space rental and advertising, to rise in line with ridership growth.
Revenue Risk - Price - Midrange
The metro concession agreements allow inflation-linked fare increases, with adjustments every 24 months, which have previously been implemented without undue political interference. Expressway toll-rate increases have been predetermined and should offset the low inflation Thailand has seen over the past decade, although it may not fully cover operating costs during periods of high inflation.
Infrastructure Dev. & Renewal - Weaker
We forecast substantial capex over the next five years, driven by investment in the new MRT Orange Line, construction of a double-deck expressway and the addition of rolling stock for the MRT Blue Line.
We regard the MRT Orange Line and double-deck expressway projects as more complex than typical toll-road developments, particularly at this early development stage, which weighs on our factor assessment. However, this is mitigated by BEM's long-standing greenfield delivery experience and the engineering, procurement and construction support from its major shareholder, CH. Karnchang Public Company Limited (CK), which has a proven on-time and on-budget record. All contracts with CK, including the MRT Orange Line, are fixed-price and date-certain.
Debt Structure - 1 - Midrange
BEM's corporate-style debt structure is predominantly non-amortising, with minimal covenants. Refinancing risk is mitigated by a long remaining concession life, robust liquidity from cash and unused committed credit lines, and well-diversified maturities. The company also has a proven record of refinancing debt well ahead of maturity and has diverse funding access across onshore banking and capital markets. About 33% of debt at end-June 2025 had floating rates, although we believe risk is manageable.
Financial Profile
Our base-case assumptions largely align with BEM's forecasts. We forecast stable revenue in 2025, which is consistent with 9M25 figures. From 2026, we project 10% average annual revenue growth through to 2030, driven by rising traffic and ridership as well as toll-rate increases. We expect revenue to rise by 4%-7% a year in 2026-2027 and by 15% on average in 2028-2030 on the completion of the MRT Orange Line. We forecast high capex of around THB13 billion a year in 2026-2030. The company also has an annual dividend payout policy of about 40%.
Our base case forecasts average net leverage (adjusted net debt/adjusted EBITDA) of about 5.2x in 2026-2035, starting at 4.3x-4.6x until 2027 (2025E: 19.0x; 2024: 10.2x), then rising to 6.3x in 2032. Leverage should normalise to around 4.0x-6.0x from 2033 as the MRT Orange Line and double-deck expressway ramp up, and could fall to below 4.0x from 2036 if there is no major investment and BEM uses free cash flow for debt repayment. Our long-term forecast through 2035 includes BEM's project development pipeline.
Our rating case takes a more conservative stance and incorporates stresses on our base case. We apply a 60bp haircut on traffic growth for toll roads and a 2pp haircut on ridership growth for the MRT Blue Line. We also apply a slower ridership ramp-up on projects in development. Other stresses include a 10pp increase in capex, 5pp increase in in-house O&M costs and a 5pp increase in the dividend payout ratio.
Our rating case forecasts average net leverage of about 6.3x in 2026-2035, starting at 4.5x-4.8x until 2027 and rising to 8.5x in 2032. Net leverage should then normalise to around 6.0x-7.0x from 2033 and fall to below 6.0x from 2036 if there is no major investment and BEM uses free cash flow for debt repayment.
We include debt incurred to finance the MRT Orange Line civil works for MRTA in our debt calculation to reflect BEM's legal obligation for the borrowings. We also include cash subsidies from MRTA to service this debt and actual scheduled remuneration payments in our EBITDA calculation. EBITDA also includes recurring dividend income from BEM's associates, TTW Public Company Limited and CK Power Public Company Limited.
PEER GROUP
We believe BEM has a similar volume risk profile to that of Thai power companies - Global Power Synergy Public Company Limited (GPSC, A+(tha)/Stable, Standalone Credit Profile (SCP): a-(tha)) and Nava Nakorn Electricity Generating Company Limited (NNEG, A-(tha)/Stable). BEM benefits from long remaining concession lives and mature transportation networks that contribute to resilient and stable revenue, while around 60% of electricity volume at GPSC and NNEG is secured under long-term power purchasing agreements with a state-owned utility. However, the remaining 40% is exposed to merchant volume risk.
BEM benefits from a favourable contracted tariff mechanism that substantially tracks inflation, while GPSC and NNEG are partially exposed to volatility in merchant pricing; historically, adjustments in merchant prices have faced delays to alleviate the impact on households during periods of high fuel prices, though we believe adjustments broadly cover costs through the cycle.
BEM and GPSC have a similar leverage profile, but we rate BEM one notch above GPSC's SCP due to its stronger business profile. NNEG has a stronger leverage profile than BEM, but its rating is capped by its business profile due to lower asset diversification, as its power plants are located at a single site. Thus, BEM is rated one notch higher than NNEG.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
- An increase in Fitch-projected average net leverage above 7.0x for a prolonged period.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
- A sustainable decrease in Fitch-projected average net leverage to below 6.0x.
TRANSACTION SUMMARY
Proceeds from the debentures totalling up to THB5,000 million will be used to refinance existing debt, fund capex and support working capital. The fixed-rate senior unsecured debentures will be issued in five tranches with maturities of three, five, seven, 10 and 12 years, and are set to mature in 2029, 2031, 2033, 2036 and 2038, respectively.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Additional information is available on www.fitchratings.com