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Fitch Affirms BAM at 'AA-(tha)'; Rates Notes
August 25, 2017 / 7:05 AM / 25 days ago

Fitch Affirms BAM at 'AA-(tha)'; Rates Notes

(The following statement was released by the rating agency) BANGKOK, August 25 (Fitch) Fitch Ratings has affirmed the National Long-Term Rating on Bangkok Commercial Asset Management Public Company Limited (BAM) at 'AA-(tha)' with a Negative Outlook. At the same time, Fitch has assigned a National Long-Term Rating of 'AA-(tha)' to BAM's senior unsecured bonds of up to THB15 billion, with a greenshoe option of an additional THB2 billion. The notes will be issued in tranches with maturities of up to ten years. Proceeds will be used for general corporate purposes and refinancing. A full list of rating action is at the end of this commentary. KEY RATING DRIVERS BAM's ratings are driven by sovereign support. BAM is fully owned by the Financial Institutions Development Fund (FIDF), which is a unit of the Bank of Thailand (BoT). BAM was established in 1998 to manage distressed assets arising from a financial crisis. Ongoing state supports is evident through regulatory advantages, such as BAM's notes being classified as banks' liquid assets and tax exemptions, which support its funding ability and profitability. BAM plays an important role in the Thai financial system as the country's largest distressed asset manager and had a sound operating performance with consistent profitability. The Negative Outlook reflects FIDF's plans to partially privatise BAM through a stock-exchange listing. Fitch believes there is a better prospect of listing over the medium term, as BAM has mostly completed pre-listing preparations that have been ongoing since 2014. Full plan details and timelines have not yet been finalised, but the privatisation plan suggests the state does not see BAM as a long-term core holding. It is possible that BAM's regulatory advantages will be removed after the listing. The senior bonds are rated at the same level as BAM's National Long-Term Rating as they represent its unsubordinated and unsecured obligations. RATING SENSITIVITIES Changes in the shareholding structure are likely to negatively affect BAM's ratings. The extent of the impact would depend on BAM's continued linkage with the state and level of ownership. A state shareholding of below 50% and the removal of BAM's regulatory advantages would be likely to result in a multiple-notch downgrade. The final rating would also depend on Fitch's expectations for BAM's leverage and overall financial profile. A reversal of the plan to partially privatise BAM and signs of a long-term commitment by the state to maintain BAM's shareholdings and regulatory advantages would lead to a revision of the Outlook to Stable and a possible re-assessment of the National Long-Term Rating. Any changes to BAM's National Long-Term Rating will have a similar effect on the issue's rating. The full list of rating actions are as follows: National Long-Term Rating affirmed at 'AA-(tha)'; Outlook Negative National Short-Term Rating affirmed at 'F1+(tha)' National Long-Term Rating on outstanding senior unsecured bonds affirmed at 'AA-(tha)' National Long-Term Rating for the senior unsecured bonds assigned at 'AA-(tha)' Contact: Primary Analyst Patchara Sarayudh Director +662 108 0152 Fitch Ratings (Thailand) Limited Park Ventures, Level 17 57 Wireless Road, Lumpini Patumwan, Bangkok 10330 Secondary Analyst Jackerin Jeeradit Associate Director +662 108 0163 Committee Chairperson Tim Roche Senior Director +61 2 8256 0310 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 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Non-Bank Financial Institutions Rating Criteria (pub. 10 Mar 2017) here National Scale Ratings Criteria (pub. 07 Mar 2017) here Additional Disclosures Solicitation Status here#solicitation Endorsement Policy 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 WEB SITE AT 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. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. 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. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. 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