Thai PTT Chemical ratings outlook revised to 'stable' – Moody’s

25 August 2010 10:27  [Source: ICIS news]

SINGAPORE (ICIS)--Moody’s Investors Service said on Wednesday that its credit ratings outlook for Thai firm PTT Chemical has been revised from “negative” to “stable” as it expects the company to maintain a steady financial profile in the next 12-18 months.

Moody’s said it has a “Baa3” issuer rating and "senior unsecured rating" for PTT Chemical, the largest petrochemical player in Thailand.

"While new olefins production capacity in Asia and Middle East is likely to continue pressuring product spreads and therefore squeeze profitability, the company's leverage and cash flow coverage metrics should be maintained by the decline in its capital expenditure requirements," said Renee Lam, vice president and senior analyst at the credit ratings firm.

PTT Chemical’s major projects, including a 1m tonne/year ethane cracker plant and polyethylene plants with a combined capacity of 1m tonne/year, had been completed but have yet to start up due to environmental issues surrounding projects in Mab Ta Phut – Thailand’s petrochemical hub.

“Assuming further delays [in the start-up of projects] for another 12-15 months in a downside scenario, Moody's expects PTT Chemical's financial profile to remain appropriate for its standalone Ba1 rating,” the credit ratings company said.

On a stand-alone basis, PTT Chemical has a “Ba1” rating, reflecting the company’s leading market position, competitive cost structure, secured access to feedstock supply, long-term sales contracts, and moderate financial policies, Moody’s said.

The final “Baa3” rating takes into account the high likelihood that PTT Chemical would get credit support from its parent company, PTT - southeast Asia’s oil and gas giant - in a distress situation, Moody’s said.

PTT controls 49.3% of PTT Chemical.

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By: Pearl Bantillo
+65 6780 4359



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