Fitch Affirms Minor International's USD Guaranteed Securities at 'BBB'

The rating reflects the credit enhancement provided to investors by the guarantee from Thailand-based Bangkok Bank Public Company Limited (BBL, BBB/Stable) acting through its Singapore and Hong Kong branches.

KEY RATING DRIVERS
Notes Equalised to Guarantor's Rating: The notes are rated at the same level as BBL's senior unsecured rating to reflect the credit enhancement provided to investors by the unconditional and irrevocable guarantee from BBL acting through its overseas branches. The guarantee ranks pari passu with BBL's unsecured and unsubordinated obligations.

Effective Maturity Dates: Fitch views the notes' first call date and the first reset date when the guarantee would terminate as the effective maturity dates. The guarantee will be in full effect until the earliest payment in full of the securities and the first call date (29 June 2023) for the USD300 million 3.1% guaranteed notes and the first reset date (19 July 2026) for the USD300 million 2.7% guaranteed notes. This is provided security holders respond in the manner required by the securities documentation.

Guarantor's Obligations: Should MINT not call the notes on the first call date for the USD300 million 3.1% guaranteed notes or the first reset date for the USD300 million 2.7% guaranteed notes (non-call event), the guarantor is required to purchase the notes at a price that covers the principal amount, accrued interest, any deferred interest, and interest on interest deferred.

In addition to the mandatory purchase on a non-call event, BBL will also be obliged to purchase the notes at a price that is calculated on the same basis as above if MINT goes into bankruptcy 30 days prior to the first call date for the USD300 million 3.1% guaranteed notes or the first reset date for the USD300 million 2.7% guaranteed notes.

Maximum Guaranteed Amounts: The total guarantee from BBL is limited to a maximum of 110% of the principal of the 3.1% notes and 115% of the principal of the 2.7% notes. This is deemed sufficient to cover the principal, potential accrued and deferred interest, and interest on deferred interest of the notes that can be accumulated during the guaranteed period.

DERIVATION SUMMARY
The rating on MINT's guaranteed notes is based solely on the unconditional and irrevocable guarantee from BBL.

RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:

• An upgrade of BBL's ratings would result in an equivalent change in the ratings on MINT's notes, which are based solely on BBL's guarantee.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

• A downgrade of BBL's ratings would result in an equivalent change in the ratings on MINT's notes, which are based solely on BBL's guarantee.

For the ratings of BBL, the following sensitivities were outlined by Fitch in a rating action commentary dated 1 December 2021:

Factors that could, individually or collectively, lead to negative rating action/downgrade:

IDRS, NATIONAL RATINGS AND SENIOR DEBT

Concurrent negative action on BBL's Government Support Rating (GSR) and Viability Rating (VR) would lead to similar action on the bank's Long-Term Issuer Default Rating (IDR), National Long-Term Rating and senior debt rating. BBL's National Rating could also be downgraded to 'AA(tha)' from 'AA+(tha)' if, in our opinion, its credit profile weakens on a relative basis in the national-rating universe of rated entities in Thailand.

VIABILITY RATING

The VR could be downgraded to 'bbb-' from 'bbb' if BBL's financial position deteriorates more than we expect, as may be reflected by downward pressure on multiple rating factors, including the operating environment (OE) score. This may arise from a much weaker economic recovery than Fitch expects, the bank's market position failing to yield the level of expected financial performance given our assessment of the OE, and/or higher appetite for risk without adequate mitigation. For example, such stresses may be indicated by an impaired loans ratio of above 6% for a sustained period, combined with weaker loss absorption buffers, such as a common equity Tier 1 (CET1) ratio of below 13% and a loan-loss coverage ratio of below 120%, and/or not sustaining an operating profit/risk-weighted assets ratio above 1.5%.

GOVERNMENT SUPPORT RATING

There could be negative action on the GSR if the government's ability to provide support declines, which could be evidenced by a downgrade of Thailand's Long-Term Foreign-Currency IDR (BBB+/Stable). There may also be negative rating action if Fitch believes that the government's propensity to support BBL diminished, for example, through a large decline in the bank's level of systemic importance or significant regulatory changes. However, we believe there is little prospect of a weaker propensity to support BBL over the medium term.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

IDRS, NATIONAL RATINGS AND SENIOR DEBT

There could be positive rating action on BBL's IDRs, National Ratings and senior debt ratings following similar changes in either its VR or GSR. The National Ratings of BBL would also take into account the bank's relative creditworthiness compared with peers rated on the national scale.

VIABILITY RATING

BBL's VR could be upgraded to 'bbb+' if key metrics improved to levels that were more consistent with those of peers in similarly rated OEs. This may be via a business profile that leads to consistently better-than-sector financial performance, aided by a stronger OE, and may be evidenced in sustained improvement in key financial ratios, such as maintaining an impaired loans ratio of less than 3% and an operating profit/risk-weighted assets ratio of above 2.5% (9M21: 1.2%), combined with the maintenance of key buffers, such as a CET1 ratio of above 16%.

GOVERNMENT SUPPORT RATING

There may be positive action on the GSR if there was a similar action on Thailand's Long-Term Foreign-Currency IDR, which would indicate the government's higher ability to support systemically important banks such as BBL. Any upward revision of the GSR would also need to consider whether the propensity to support banks remains intact. It is unlikely that there would be positive action on BBL's GSR if the sovereign rating remained unchanged.

BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate 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.

ISSUER PROFILE
MINT is one of the Asia-Pacific's largest hospitality and leisure companies. MINT owns 94% of NH Hotel Group S.A. (NHH, B-/Negative) following the acquisition in 2018. MINT is listed on Thailand's stock exchange and NHH on Madrid's stock exchange.

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
The ratings on MINT's guaranteed senior perpetual capital securities are directly linked to the senior unsecured rating of BBL, the guarantee provider. A change in Fitch's assessment of the senior unsecured rating of BBL would automatically result in a change in the rating on MINT's notes. In addition, any change in Fitch's view on the contract of guarantee may result in a downgrade to the guaranteed securities.

Additional information is available on www.fitchratings.com

• ข่าวMinor International
• ข่าวFitch Ratings
• ข่าวBangkok Bank
• ข่าวo:editor
• ข่าวo:fin