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April 22 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has assigned Kasikornbank Public Company Limited’s (KBank: ‘BBB+'/Stable) outstanding USD2.5bn euro medium term note (EMTN) programme a senior unsecured rating of ‘BBB+'.
Fitch has also assigned an expected ‘BBB+(EXP)’ rating to KBank’s proposed unsecured senior notes to be issued under this EMTN programme. The notes will be issued through KBank’s Cayman Islands branch. The proceeds would be used for the bank’s funding and general corporate purposes. The final rating is subject to the receipt of final documentation conforming to information already received.
Fitch stresses that there is no assurance that notes issued in the future under the programme will be rated the same as the programme rating, as the programme also permits the issuance of subordinated notes.
The senior notes are rated at the same level as KBank’s Long-Term Foreign Currency Issuer Default Rating (LTFC IDR) of ‘BBB+’ as they represent unsecured and unsubordinated obligations of the bank.
KBank’s ratings are based on its solid domestic franchise, improved asset quality, steady funding and liquidity, sound capitalisation as well as strong profitability.
The ratings on the EMTN programme and senior unsecured notes would be directly impacted by any changes in KBank’s LTFC IDR.
A higher sovereign rating, improvement in the operating environment and further strengthening in the bank’s overall financial profile, may be positive for KBank’s ratings. However, prospects for an upgrade in the IDRs and Viability Rating are currently low.
A downgrade may result from an increasing risk of significant deterioration in asset quality that leads to an erosion of profitability or capital. Examples include increasing risk appetite through rising loan concentration and/or excessive loan growth in the absence of further strengthening buffers through higher profitability and capital.
The other ratings of KBank are unaffected by this action, and are as follows:
Long-Term Foreign Currency IDR: ‘BBB+'; Outlook Stable
Short-Term Foreign Currency IDR: ‘F2’
Viability Rating: ‘bbb+’
Support Rating: ‘2’
Support Rating Floor: ‘BBB-’
National Long-Term Rating: ‘AA(tha)'; Outlook Stable
National Short-Term Rating: ‘F1+(tha)’
Long-term foreign currency senior unsecured debt: ‘BBB+’
National Short-term senior unsecured debt: ‘F1+(tha)’
National Long-term subordinated debt (legacy Basel II Tier 2 securities): ‘AA-(tha)'