Several Thai firms' ratings could be downgraded: Agency
Several Thai firms' ratings could be downgraded: Agency
BANGKOK (AFP): New York-based credit rating agency Standard
and Poor's yesterday issued a statement warning that its ratings
of several Thai financial institutions could be downgraded.
Increases in company reports of accrued interest receivable,
meaning interest payments due but not paid by the institutions'
debtors, indicated that nonperforming loans and loan losses were
on the rise, the statement said.
"Non-accrual loans in Thai financial institutions are very
high by international standards," the agency said.
"This leading indicator suggests non-performing loans will
peak at a higher level than expected by both individual
institutions and regulators," it said.
Thai financial institutions were being squeezed by an increase
in loan-loss provisioning requirements, a slumping property
market, high interest rates causing further stress to borrowers
in an economic slowdown, and the more than 20 percent fall of the
baht since its July 2 float.
These factors had led to greater than expected asset quality
problems affecting even those institutions rated by the agency,
which were among the strongest and best placed to increase
provisions to a suitable level.
Bangkok Bank plc had identical local and foreign currency
ratings of "A-minus/A-2", Bank of Asia plc "BB-plus/B", Bank of
Ayudhya plc "BBB/A-3", The Industrial Finance Corp. of Thailand
"A-minus/A-2", Krungthai Thanakit plc "BBB-minus/A-3", Siam
Commercial Bank plc "BBB-plus/A-2", Phatra Thanakit plc "BBB-
minus/A-3", and Thai Farmers Bank plc "BBB-plus/A-2.
Other ratings at risk were the "BBB" ratings of the foreign
currency subordinated notes of Bangkok Bank, Siam Commercial Bank
and Thai Farmers Bank.
The agency also issued a credit watch with negative
implications on Thailand's sovereign "A" long-term foreign
currency rating and its "AA" long-term local currency rating.
The credit watch on Thailand's sovereign ratings were a factor
in reviewing the ratings of the two state-owned institutions on
the list, International Finance Corp. of Thailand and Krungthai
Thanakit, the statement said.