Fitch Thailand Assigns ‘AA+(tha)’ to PTT’s New Debentures
Fitch Ratings (Thailand) Limited has today assigned National Long-term ratings of ‘AA+(tha)’ to three new tranches of PTT Public Company Limited’s (PTT, rated ‘AA+(tha)’/Stable) 7-year, 10-year and 11-year unsecured and unsubordinated debentures, totaling about THB7.0 billion.
The ratings reflect PTT’s dominance in the gas and oil business in Thailand, as well as its strategic importance and function as a policy vehicle for Thailand’s energy security and development.
The ratings also take into account the company’s majority state ownership and strong support, good management track record, and its solid and stable cash flow generating capability. PTT enjoys a natural monopoly in gas transmission and distribution through its established pipeline network, helped further by a secure demand via its long-term sales contracts and the high barriers of entry to its capital-intensive business. Through its subsidiary, PTT Exploration and Production (PTTEP), PTT is one of Thailand’s major exploration and production companies, with the country’s largest reserves and second-largest production. PTT also offtakes and resells virtually all of Thailand’s natural gas, and has the largest market share of LPG and oil sales. The gas interests are the main contributor to its EBITDA, and cash flows from this activity have proved relatively stable, thanks to long-term supply and sales agreements with minimum take-or-pay conditions, a cost-plus pricing structure and generally less volatile gas prices relative to oil prices.