Fitch rates PTT notes AA+(tha)

Fitch Ratings (Thailand) Ltd. said it assigned AA+(tha) national long-term ratings to Thailand-based PTT PCL's two new tranches of notes. One tranche will include up to 4 billion Thai baht of five-year debentures and the other will include up to 8 billion Thai baht of 10-year debentures.

The outlook is positive.

The agency said PTT's ratings reflect its dominance in the gas and oil business in Thailand, its strategic importance and function as a policy vehicle for Thailand's energy security and development. The ratings are also underpinned by its majority state ownership and strong support, good management track record and its solid and stable cash flow generating capability. Net debt to last-12-month EBITDA was 1.1x for the first half of 2006.

Rating concerns include the large budgeted capital expenditure, volatile commodity prices exposure and regulatory and political risks, the agency said. Recently, the Supreme Administration Court of Thailand accepted a complaint filed by the Foundation for Consumers against the privatization of PTT. In the event of an adverse ruling, resulting in the reverse of the privatization of PTT, Fitch said the impact on PTT's credit should be neutral.

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