Fitch revises outlook on Bank of Ayudhya to positive
Fitch Ratings has revised the Outlook on the International and National Long-term ratings of the Bank of Ayudhya Public Company Limited (BAY) to Positive from Stable. This follows the increasing commitment of GE Capital International Holdings Corporation (GECIH) to the bank, as evidenced by BAY’s planned purchase of GECIH’s auto loan business in Thailand, as well as additional capital increases in July and last week resulting in GECIH increasing its stake in BAY to 35% from 29%.
BAY’s ratings are now as follows: Long-term foreign currency Issuer Default Rating (IDR) ‘BBB-’ (BBB minus) with Positive Outlook, Short-term foreign currency IDR ‘F3′, National Long-term Rating ‘A+(tha)’ with Positive Outlook, National Short-term Rating ‘F1(tha)’, Individual rating ‘C/D’, Support rating ‘3′, Support Rating Floor at ‘BB’, subordinated debt rating at ‘BB+’ and National subordinated debt rating at ‘A(tha)’. Earlier in January 2007, Fitch Ratings upgraded BAY’s ratings after GECIH completed the acquisition of a 29% stake in the bank.
The Outlook revision is based on the increasing commitment of GECIH, as well as BAY’s stronger capital position and franchise, notwithstanding the difficult operating environment in 2007. While asset quality remains weak, strong capital buffers and an expected improved economic outlook in 2008, together with the operational and financial support of GECIH, should see its performance improve over the next one to two years. Downside risks could arise from a further period of weak economic growth and political instability which more severely impacts loan growth and asset quality. — www.theasianbanker.com (September 26 2007)–