Fitch cuts Aeon Thana Sinsap bonds to BBB+

Fitch Ratings (Thailand) said it downgraded the national long-term rating of Thailand-based Aeon Thana Sinsap plc and its senior unsecured bond issues to BBB+(tha) from A-(tha) and affirmed the company's national short-term rating at F2(tha).

The agency said the downgrade primarily reflects the significant rise in Aeon Thana Sinsap's credit costs over the past two years as a result of an upward shift in delinquencies and lower margins due to regulatory caps and higher funding costs. However, the agency added, higher fee income has partly offset the impact on profitability to date.

The company's aggressive growth strategy, increasing proportion of cash card and revolving cash loan products and a weakening operating environment are likely to lead to further pressures on asset quality and profitability, according to Fitch.

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