June 18, 2013 / 4:07 AM / 4 years ago

Fitch Rates Bank of Ayudhya's Senior Debentures 'AA-(tha)'

(The following statement was released by the rating agency) BANGKOK/SINGAPORE, June 17 (Fitch) Fitch Ratings (Thailand) has assigned Bank of Ayudhya Public Company Limited's (BAY; AA-(tha)/Stable) upcoming senior unsecured debentures of up to THB8bn a National Long-Term Rating of 'AA-(tha)'. The debentures will be issued in two tranches with maturity of two and three years. The bank has an option to issue up to a further THB4bn of debentures. The proceeds will be used for the bank's general corporate purposes. Key Rating Drivers The senior debentures are rated at the same level as BAY's National Long-Term Rating of 'AA-(tha)' as they represent unsecured and unsubordinated obligations of the bank. BAY's ratings are based on its standalone financial strength. The bank's performance and asset quality have further strengthened while its capitalisation has remained adequate. The ratings also take into account BAY's greater reliance on wholesale funding and a higher loans/deposits ratio compared with domestic peers and similarly rated international peers. The Stable Outlook reflects Fitch's expectation that BAY would maintain its overall credit profile. Rating Sensitivities Any change in BAY's National Ratings will affect the rating of the senior unsecured debentures. An upgrade of BAY's ratings is unlikely in the medium term given the bank's narrow lending and deposits franchise and its high concentration in consumer loans relative to major domestic peers. An improvement in BAY's deposits franchise, as measured by retail deposits funding as a share of total funding, an improvement in its loan/deposits ratio to levels closer to its major domestic peers' and firmer liquidity buffer, should help strengthen its position at the current rating level. This is provided that strong asset quality and adequate capitalisation are maintained. On the other hand, a substantial weakening in the bank's capital position, or a significant deterioration in asset quality and an increase in liquidity risk due to aggressive asset growth or higher reliance on wholesale funding, could lead to negative rating action. BAY was established in 1945 and is Thailand's fifth-largest commercial bank. GEICH, a subsidiary of General Electric Captial Corportion Inc., holds a 25.3% stake, while the Ratanarak Group holds another 25%. The bank's key subsidiaries are involved in auto finance, credit cards, consumer finance, securities and fund management. Contacts: Primary Analyst Patchara Sarayudh Associate Director +66 2108 0153 Fitch Ratings (Thailand) Limited Level 17, Park Ventures, 57 Wireless Road, Lumpini, Patumwan Bangkok 10330 Secondary Analyst Chutimas Sivamard, CFA Director +66 26108 0152 Committee Chairperson Mark Young Managing Director +65 6796 7229 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Note to Editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(tha)' for National ratings in Thailand. Specific letter grades are not therefore internationally comparable. Additional information is available at www.fitchratings.com. Applicable criteria, "Global Financial Institution Criteria", dated 15 August 2012 and "National Ratings Criteria", dated 19 January 2011; are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here National Ratings Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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