Fitch affirms ‘A+’ for PTT Chemical, revises outlook to stable

04 June 2010 10:55  [Source: ICIS news]

SINGAPORE (ICIS news)--Fitch Ratings has affirmed its “A+” national long-term rating for PTT Chemical and revised its outlook to stable, citing the Thailand-based producer’s better-than-expected earnings last year, the ratings agency said on Friday.

In addition, Fitch affirmed PTT Chemical’s “F1 (tha)” national short-term rating, its “A+” rating on outstanding senior unsecured bonds and its “AA-(tha)” rating on senior secured debentures.

Supporting PTT Chemical’s strong rating was its high level of business and operational integration with Thai oil and gas major PTT, which has an “AAA” rating and a stable outlook, Fitch said.

“[PTT Chemical] has a favourable feedstock arrangement and a product off-take agreement with PTT. The ratings are also based on its large and low-cost olefins production, with an increasing level of downstream integration, which should help support earnings growth and reduce earnings volatility in the longer term,” said Fitch.

In 2009, Fitch said PTT Chemical’s net debt and leverage came in better than expected due to improved cashflow and lower capital expenditures.

PTT Chemical’s ratings outlook was revised from negative, as Fitch expected the company to bring down its level of indebtedness next year as a result of the full commercial run of its new ethane cracker and polymer capacities.

Fitch said the petrochemical industry this year is to be depressed because of excess supply coming from the Middle East and rising feedstock costs.

Under such conditions, the industry’s margins and utilisation rates are expected to be low, particularly if global economic growth remains weak, Fitch added.

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By: Pearl Bantillo
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