Fitch affirms Vanachai

Fitch Ratings (Thailand) Ltd. said it has affirmed the BBB+(tha) long-term national ratings of the two tranches of Vanachai Group Public Co. Ltd.'s secured debentures No.1/2002 due 2005 and No.1/2003 due 2008.

The outlook remains stable.

This reflects Vanachai Group's creditworthiness and the value of the collateral on the securities. The ratings of Vanachai Group also point to its leading position in the domestic market, and its high level of production integration through backward expansion into glue production and planned forward expansion into downstream products.

Although new debt from particle board expansion resulted in a significant increase in Vanachai Group's financial leverage in 2003, its debt servicing has remained manageable, the agency noted.

Fitch said the ratings also take into account concerns about domestic oversupply and higher volatility of rubber wood prices - its key raw material. Other concerns include the company's high dependence on export markets in the region, where the economic outlook is uncertain, as well as the appreciation of the Thai baht.

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