Fitch Assigns 'BBB(EXP)' to Minor International's Proposed USD Guaranteed Securities

The rating reflects the credit enhancement provided to investors by the unconditional and irrevocable guarantee from Thailand-based Bangkok Bank Public Company Limited (BBL; BBB/Stable) acting through its Hong Kong branch. The final rating is contingent upon the receipt of final documentation, which conforms to Fitch's expectation that the final maximum guaranteed amount is deemed sufficient to cover the principal, premium (if any), and potential accrued and deferred interest, and interest on the deferred interest of the notes that can be accumulated during the first three-year period until the first call date in 2023.

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 Hong Kong branch. The guarantee ranks pari passu with BBL's unsecured and unsubordinated obligations.

First Call Date in 2023: The guarantee will be in full effect until the earliest of the payment in full of the securities and the first call date in 2023, provided security holders respond in the manner required by the securities documentation. Should MINT not call the notes on the call date in 2023 (non-call event), the guarantor is required to purchase the notes at a price that covers the principal amount, premium (if any), accrued interest, any deferred interest, and interest on interest deferred. In addition to the mandatory purchase on a non-call event, if MINT goes into bankruptcy before the first call date, BBL will also be obliged to purchase the notes at a price that is calculated on the same basis as above. Fitch sees the notes' first call date as the effective maturity date.

Maximum Guaranteed Amount Not Finalised: The total guaranteed amount from BBL is limited to a maximum guaranteed amount, which has not been finalised at this stage. The final amount, which is contingent upon the final coupon rate, is deemed sufficient to cover the principal and potential accrued and deferred interest, and interest on deferred interest of the notes that can be accumulated during this period.

Fitch will review the final terms to ensure that this is sufficient to cover the principal and potential accrued and deferred interest, and interest on deferred interest of the notes that can be accumulated during this 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 rating 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 rating 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 2 April 2020:

IDRS, NATIONAL RATINGS AND SENIOR DEBT

Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:

The Issuer Default Ratings (IDR), National Ratings and ratings on the senior debt of BBL are sensitive to changes in its standalone profile as indicated by its Viability Rating (VR). Positive action on BBL's VR could lead to similar action on the bank's Long-Term IDR and senior debt rating.

Changes in Fitch's perception of BBL's credit profile relative to the national-rating universe in Thailand could affect BBL's National Ratings. However, an upgrade of the National Ratings is not probable in the near term, given BBL's credit profile and rating relative to local large-bank peers.

Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:

Negative action on the VR would lead to similar action on the IDR and senior debt rating, although downside may be limited to Fitch's assessment of the Support Rating and Support Rating Floor, the latter of which is currently 'BBB-'. A downgrade of BBL's National Ratings would likely arise from a weakening in its overall credit profile on a relative basis to the national-rating universe of Thai financial institutions.

VIABILITY RATING

Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:

The VR could be upgraded to 'bbb+' if the asset-quality trend is more consistent with higher-rated banks operating in a 'bbb' category environment (eg non-performing loan (NPL) ratio of below 3%), combined with maintenance of sound buffers in loan-loss reserves and core capital (eg common equity Tier 1 (CET1) ratio sustained above 16%). This would also depend on profitability being sustainably improved, without an increase in risk appetite, as this would aid internal capital generation or retention.

Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:

The VR could be downgraded to 'bbb-' if BBL's capitalisation deteriorated further to be an insufficient buffer to poor asset quality; for example, the CET1 ratio weakens to lower than 13% over the next two years with its NPL ratio above 6% and loan-loss coverage ratio lower than 120%. In our view, this could arise if BBL's profitability were to be further compromised, with the potential for deterioration in its profitability and asset quality, reflecting both the challenging operating environment and the bank's perceived appetite for risk.

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