Fitch Affirms DAD SPV's Bonds at 'AAAsf(tha)'; Outlook Stable

KEY RATING DRIVERS

Sovereign Credit Underpinned Ratings: The ratings are based on irrevocable and unconditional lease payments from the Treasury Department (TD) of the Ministry of Finance, which is the sole obligor under the lease agreements with DAD. The transaction reflects the TD's creditworthiness because DAD SPV's cash flow is derived mainly from the lease payments.

Sound Financial Structure: Lease payments from the TD are sourced from annual budget appropriations. DAD SPV has received all lease payments as scheduled since they commenced in July 2008, with the most recent in October 2024. Fitch expects the transaction to maintain a debt service coverage ratio of at least 1x and withstand a refinancing rate higher than the agency's 'AAAsf(tha)' assumption of 15%, based on scheduled annual lease payments. The refinancing is advancing and is likely to be completed before the maturity of the bonds in November 2025.

Commingling risks are mitigated as lease payments are made directly from the TD to DAD SPV. Additionally, DAD has a THB2.3 billion credit line from Krung Thai Bank Public Company Limited (AAA(tha)/Stable/F1+(tha)) to cover any unpaid lease payments by the TD, although this facility has never been used.

Support from Reserves and Swaps: The ratings are also underpinned by available reserves and a long-term swap agreement with The Hongkong and Shanghai Banking Corporation Limited (HSBC, AA-/Stable/F1+), which provides guaranteed returns on cash between 2008 and 2025. Fitch treats HSBC as an additional risk in applying the Two-Risk CLN Matrix under the agency's Single-and Multi-Name Credit-Linked Notes Rating Criteria, due to the absence of minimum required ratings for the swap provider in the transaction documents.

Experienced Originator and Administrator: DAD and Conduit Management Services Limited have served as the transaction originator and administrator, respectively, since the transaction's closing, and have the experience to carry out their duties relating to the transaction.

Adequate Asset Isolation, Sound Legal Structure: The issuer is a special-purpose company incorporated under the laws of Thailand to issue bonds, whose proceeds have been used to purchase the rights to cash flow under a set of agreements.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
The ratings are based on the creditworthiness of the TD and HSBC; therefore, any negative rating action on either entity may affect the ratings. However, Fitch considers a downgrade due to asset performance unlikely due to the irrevocable and unconditional pre-determined lease payments from the TD.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
There is no upside to the bonds' National Rating, which is already at the highest level.

USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10

Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.

DATA ADEQUACY

Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third-party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring.

Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable.

Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis, according to its applicable rating methodologies, indicates that it is adequately reliable.

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.

Additional information is available on www.fitchratings.com

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