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.