Fitch Ratings has assigned GC Treasury Center Company Limited’s proposed US dollar subordinated perpetual debentures a rating of ‘BB’. The debentures are guaranteed by Thailand-based PTT Global Chemical Public Company Limited (PTTGC, BBB-/AA-(tha)/Stable) on a subordinated basis. The issuance will be payable upon dissolution with the issuer’s right to early redemption and unconditional interest deferral.
The rating on the proposed perpetual debentures is two notches below PTTGC’s Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘BBB-‘, in accordance with Fitch’s Corporate Hybrids Treatment and Notching Criteria. The rating includes two notches for loss severity, reflecting the debentures’ subordination and heightened risk of non-performance relative to other obligations.
KEY RATING DRIVERS
50% Equity Credit: The proposed subordinated perpetual debentures qualify for 50% equity credit as they meet Fitch’s criteria regarding deep subordination, the remaining effective maturity is at least five years, there is full discretion to defer coupons for at least five years and events of default are limited. These are key equity-like characteristics, affording PTTGC greater financial flexibility. Equity credit is limited to 50% and not higher, as deferral of interest coupon is cumulative.
Effective Maturity Date: Fitch deems the proposed subordinated perpetual debentures as having no effective maturity date because the coupon step-up is within Fitch’s aggregate threshold of 100bp, in accordance with the agency’s criteria on hybrid securities. The cumulative coupon step-ups are limited to 25bp at the first coupon step-up date and 100bp at the second coupon step-up date.
High Leverage: PTTGC’s EBITDA net leverage increased to 7.6x by end-2024 (2023: 6.9x) due to weaker earnings than we expected. We expect PTTGC’s rating headroom to remain low in 2025, despite a decline in EBITDA net leverage to 4x-6x in 2025-2026 through a gradual earnings recovery and lower capex. We believe the upcoming perpetual debentures, once issued, will also help improve leverage by about 0.5x.
Slow Earnings Recovery: Fitch expects PTTGC’s EBITDA to improve moderately to THB35 billion-THB40 billion in 2026 (2024: THB26.5 billion) and reach its mid-cycle level at around THB50 billion in 2028-2029. However, a weaker demand or margin than we expect could further delay the earnings recovery.
Weak Petrochemical Spreads: We expect a moderate recovery in the petrochemical industry in 2025 from the 2024 low on lower feedstock costs and crude oil prices. However, we expect the petrochemical spread to remain under pressure amid uncertain Chinese demand, slowing global growth and persistent industry overcapacity. Consumer demand in APAC is likely to be sluggish, especially as we expect China’s GDP growth to remain below pre-pandemic levels until at least 2026. Escalating trade tensions could put further pressure on demand. We expect the pace of new capacity additions to remain high through to 2026, although this will be partly offset by capacity rationalisation.
Commitment to Deleveraging: The prolonged earnings recovery could have a negative impact on financial leverage. However, Fitch believes PTTGC is exploring other debt reduction strategies apart from the issuance of hybrid securities, including reduction of capex and operating expenditure, and sale of non-core assets. The measures should provide some flexibility to deleverage, should earnings recover more slowly than we expect.
Medium Support Linkages with Parent: The two-notch uplift from PTTGC’s Standalone Credit Profile (SCP) reflects Fitch’s view that its largest shareholder, PTT Public Company Limited (PTT, BBB+/AAA(tha)/Stable), has ‘Medium’ strategic and operational incentives to provide support, based on our Parent and Subsidiary Linkage Rating Criteria. We believe the petrochemical and refinery businesses, of which PTTGC is a major component, are strategically important to PTT. PTTGC is also PTT’s major feedstock offtaker.
We believe PTT will provide PTTGC with financial flexibility and liquidity support to help manage its leverage. PTT extended the crude payment terms on PTTGC’s feedstock purchases in May 2025, which will ease working capital requirements by about THB40 billion in 2025.
PEER ANALYSIS
PTTGC has a slightly weaker business profile than Alpek, S.A.B. de C.V. (BBB-/Negative). Alpek has a leading market position for purified terephthalic acid, polyethylene terephthalate, recycled polyethylene terephthalate and expandable polystyrene in the Americas, while PTTGC is the leading petrochemical company in ASEAN. Around 92% of Alpek’s revenue is from consumer goods segments such as food and beverage, and consumer staples, which have resilient demand. Alpek is rated two notches higher than PTTGC’s ‘bb’ SCP as Alpek’s leverage profile is stronger than that of PTTGC.
PTTGC’s business profile is similar to that of Braskem S.A. (BB-/Rating Watch Negative). Braskem is larger than PTTGC in terms of operational scale but has high exposure to infrastructure and construction, leading to a more volatile earnings profile. Braskem has a weaker financial profile than PTTGC due to a higher leverage outlook. As a result, Braskem is rated one notch lower than PTTGC’s ‘bb’ SCP.
Synthos Spolka Akcyjna’s (BB/Negative) business profile is weaker than that of PTTGC due to its smaller scale, lower diversification and weaker global product leadership, although its synthetic rubber segment is strengthening with the acquisition of assets from Trinseo. Synthos’s better financial leverage, compared with PTTGC, offsets its weaker business profile, resulting in Synthos being rated the same as PTTGC’s SCP.
PTTGC has the strongest business profile among Thai downstream oil and gas peers, and its financial leverage is also lower. The company has a larger operating scale, greater integration in petrochemicals and higher profitability than Thai Oil Public Company Limited (A+(tha)/Negative).
KEY ASSUMPTIONS
Fitch’s Key Assumptions Within Our Rating Case for the Issuer:
- Benchmark Brent crude price at USD70/barrel in 2025 and USD65/barrel in 2026, with PTTGC’s crude procurement costs adjusted for applicable premiums;
- Profitability of petrochemicals to remain under pressure in 2025 as new supply and weak demand will pressure petrochemical spreads;
- Gross refining margin, excluding inventory gains/losses, to recover starting 2025;
- Extension of credit terms on crude supply from PTT to continue in 2025-2026;
- Total capex and investments of around THB62 billion over 2025-2027;
- Dividend payouts of 50% of consolidated net profit;
- Proportionate consolidation of HMC Polymers Company Limited (BBB(tha)/Negative).
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:
- The company not being on track to reduce EBITDA net leverage to below 4x on a sustained basis
- A perceived weakening of incentives for PTT to support PTTGC
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:
- EBITDA net leverage improving to below 3x on a sustained basis
- Perceived stronger incentives for PTT to support PTTGC
LIQUIDITY AND DEBT STRUCTURE
PTTGC had outstanding debt of THB225.9 billion at end-June 2025, of which THB11.0 billion will mature within 12 months. Liquidity was supported by THB27.9 billion of unrestricted cash and probable working capital inflow from the extension of crude payment terms with PTT in 2025. PTTGC has adequate access to the debt capital market as a result of its close links with PTT and leading market position in Thailand’s petrochemical business.
ISSUER PROFILE
PTTGC is the largest and fully integrated petrochemical and refining company in Thailand, with a combined petrochemical and chemical capacity of 14.2 million tonnes a year and crude oil and condensate distillation capacity of 280,000 barrels a day at end-2024.
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
PTTGC’s ratings incorporate a two-notch uplift from its SCP due to the ‘Medium’ support incentive from its parent, PTT.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Click here to access Fitch’s latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in our credit analysis. Fitch’s macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.
ESG CONSIDERATIONS
The highest level of ESG credit relevance is a score of ‘3’, unless otherwise disclosed in this section. A score of ‘3’ 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. Fitch’s ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch’s ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
Symbol: PTTGC