Fitch Rates Thailand’s EXIM’s USD Senior Notes ‘BBB+(EXP)’

Fitch Ratings has assigned Export-Import Bank of Thailand’s (EXIM, BBB+/Stable) proposed five-year senior unsecured notes an expected rating of ‘BBB+(EXP)’. The proposed notes will be issued under the bank’s updated USD3.0 billion medium-term note programme. EXIM plans to use the proceeds for general corporate purposes.

The final rating is contingent upon the receipt of final documents conforming to information already received. The issuance will be listed in Singapore.

KEY RATING DRIVERS
Fitch rates the proposed senior unsecured notes at the same level as EXIM’s Long-Term Foreign-Currency Issuer Default Rating (IDR), as they will constitute the bank’s unsecured and unsubordinated obligations.

EXIM’s IDR is equalised with Thailand’s sovereign rating (BBB+/Stable/F1), reflecting Fitch’s view that there is a high probability EXIM would receive extraordinary support from the Thai government, if needed. EXIM is a state policy bank established under specific legislation. It is wholly owned by the Thai Ministry of Finance, which governs the bank’s management and strategy.

For further details on EXIM’s key rating drivers and sensitivities, see Fitch Affirms Thailand’s EXIM at ‘BBB+’; Outlook Stable

RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A downgrade is likely if the sovereign’s ability to support the bank weakens, as reflected by a lower sovereign rating, or if the state’s propensity to support the bank were to deteriorate. This may be reflected by the government reducing its shareholding significantly or if the bank changes its legal status. However, Fitch deems such events as unlikely in the medium term.

Factors that could, individually or collectively, lead to positive rating action/upgrade:
The proposed senior unsecured notes are rated at the same level as the Thai sovereign’s IDR. This means an upgrade of the sovereign IDR could lead to an upgrade of EXIM’s IDR and senior debt rating.

BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from ‘AAA’ to ‘D’. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579

DATE OF RELEVANT COMMITTEE
18 October 2021

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
EXIM’s ratings are linked to the Thai sovereign’s IDRs.

ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of ‘3’. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch’s ESG Relevance Scores, visit www.fitchratings.com/esg

Additional information is available on www.fitchratings.com

Source: Fitch Ratings