Fitch Assigns PAMCO’s Proposed THB Guaranteed Short-Term Notes ‘F1+(tha)(EXP)’ Expected Rating

Fitch Ratings Thailand, has assigned Phahonyothin Asset Management Co., Ltd.’s (PAMCO) upcoming guaranteed short-term notes of up to THB3.6 billion a National Short-Term Rating of ‘F1+(tha)(EXP)’. The notes will be issued under PAMCO’s existing medium-term note (MTN) programme and the proceeds will be used for debt repayment, liquidity management, and purchase of non-performing loans and non-performing assets. The final rating is subject to the receipt of final documentation conforming to information already received.

At the same time, Fitch has assigned national ratings to PAMCO’s outstanding MTN programme and guaranteed notes as follows:

– PAMCO’s existing MTN programme, which only allows issuance of guaranteed notes with a maximum issuance size of THB30 billion on a revolving basis, assigned a National Long-Term Rating of ‘AA+(tha)’ and National Short-Term Rating of ‘F1+(tha)’
– Guaranteed notes of THB500 million due in October 2023 and THB2.0 billion due in December 2023, assigned National Long-Term Ratings of ‘AA+(tha)’ with Stable Outlooks.

PAMCO is a wholly owned subsidiary of TMBThanachart Bank Public Company Limited (TTB; BBB/AA+(tha)/Stable/F1+(tha)). The company was established in 2018, and its main business is managing non-performing loans and non-performing assets.

KEY RATING DRIVERS

The ratings on PAMCO’s guaranteed notes and MTN programme are based entirely on irrevocable and unconditional guarantees provided by TTB. The ratings on the notes and the MTN programme are equalised with those of TTB, as the guaranteed notes and issuances under the MTN programme would represent unsecured and senior obligations of TTB in the event of non-payment by PAMCO. The Stable Outlook on the long-term guaranteed notes is consistent with that of the guarantor, TTB.

TTB’s Issuer Default Ratings and National Ratings are driven by its Government Support Rating, which reflects Fitch’s view of the government’s ability and propensity to provide extraordinary support to TTB in times of need. Support prospects are mainly driven by TTB’s systemic importance as the sixth-largest bank in Thailand and its designation by the Bank of Thailand as a domestic systemically important bank.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

The national ratings on the guaranteed notes and MTN programme are sensitive to changes in TTB’s National Long-Term and Short-Term Ratings. A downgrade of TTB’s national ratings would lead to similar rating action on PAMCO’s guaranteed notes and MTN programme.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

An upgrade of TTB’s national ratings would prompt similar rating action on PAMCO’s guaranteed notes and MTN programme.

Date of Relevant Committee

08-Jun-2023

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.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS

The ratings on PAMCO’s guaranteed notes and MTN programme are linked to TTB’s National Ratings.

Roberto Sergio

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Managing Director of Credit Village, Roberto Sergio has more than 20 years of experience in NPL and distressed debt in the Italian and International market. He is the editor of the NPL column in Credit Village Magazine and the director of Credit Village's National NPL Market Observatory.