Credit quality is slowly beginning to stabilize across nonfinancial industries, though rating activity remains more negative than positive, said an article published today by Standard & Poor's, titled "Three U.S. Industries With The Greatest Potential To Improve Their Credit Quality In 2010 (Premium)." As the economy slowly rebounds in 2010, we expect to see areas of improvement, though upgrades likely will trail downgrades in most sectors.
"After reviewing the distribution of outlooks and CreditWatch listings, ratings trends, the performance of bond spreads, and recent operating results, we identified three sectors that we believe have the potential to see an upturn in creditworthiness next year," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "These three are health care, telecommunications, and chemicals."
Health care, which weathered the storm better than most sectors, has a relatively high positive bias (the proportion of issuers with a positive outlook or ratings on CreditWatch positive) and has seen relatively strong operating results.
The telecommunications sector also has fared well during the recession, despite having a number of highly leveraged companies. Improvement in economic and credit market conditions is supportive of continued stabilization and potential improvement in the credit quality of the telecommunications sector.
The chemicals sector has performed much worse than the other two sectors during the recession, though it has begun to show signs of stabilization. Given the cyclical nature of the sector, stronger economic conditions in 2010 could give credit quality a boost.
This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers to RatingsDirect on the Global Credit Portal at www.globalcreditportal.com and to RatingsDirect at www.ratingsdirect.com. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.
Tuesday, December 15, 2009
PTT Chemical and SMC to join together for developing Thailand’s plastic industry through a strategic network
Mr. Veerasak Kositpaisal, President & CEO of PTT Chemical Plc., and Mr. Anuchit Boonthong, Chairman of SMC Corporation Limited, signed the Memorandum of Understanding to initiate a mutual co-operation on the development and support of Thailand’s blow molding industry. The two companies intend to increase the strength and potential of Thai plastic manufacturers in terms of capability to better respond to current market needs and to successfully compete in the global market.
The signing of MOU reaffirms PTT Chemical strong commitment to work together with entrepreneurs and customers to strengthen the capacity of Thailand’s plastic industry. It also marks the company’s determination to build a solid strategic business network and partnership among entrepreneurs linked to Value Chain of the plastic industry, which ranges from material manufacturers and machinery producers to end-users. For SMC, the country’s leading blow molding machinery manufacturer and vendor serving customers in over 40 countries worldwide, it will also strive to invent new technology and innovative production which allow it to react and adapt to an ever-changing market. The improvement of products and services would be mainly driven by market demands.
PTT Chemical and SMC have realized the value of partnership among related businesses where synergy and collaboration is required to reinforce the business efficiency. The development of technology, product and service, and distribution channel that aligns with the emerging consumer demands would also bring the highest benefit to the consumers and the country’s plastic industry.
Taking a role of solution provider for the customers ranging from manufacturers to end-users, PTT Chemical, is now ready to team up with entrepreneurs, customers, and those who are interested, to lift up Thailand’s plastic industry. PTT Chemical Plc is Thailand’s leading petrochemical and plastic resins manufacturer with the Olefins production capacity of 1.8 million tons per year and the HDPE production capacity of 800,000 tons per year. In the fourth quarter of 2009 to early 2010, the company will start a commercial operation of its LLDPE and LDPE plants which will give a production capacity of 400,000 tons per year and 300,000 tons per year, respectively. With the new products soon to be launched to the market the company aims to offer more solutions as well as complete services to the market.
The signing of MOU reaffirms PTT Chemical strong commitment to work together with entrepreneurs and customers to strengthen the capacity of Thailand’s plastic industry. It also marks the company’s determination to build a solid strategic business network and partnership among entrepreneurs linked to Value Chain of the plastic industry, which ranges from material manufacturers and machinery producers to end-users. For SMC, the country’s leading blow molding machinery manufacturer and vendor serving customers in over 40 countries worldwide, it will also strive to invent new technology and innovative production which allow it to react and adapt to an ever-changing market. The improvement of products and services would be mainly driven by market demands.
PTT Chemical and SMC have realized the value of partnership among related businesses where synergy and collaboration is required to reinforce the business efficiency. The development of technology, product and service, and distribution channel that aligns with the emerging consumer demands would also bring the highest benefit to the consumers and the country’s plastic industry.
Taking a role of solution provider for the customers ranging from manufacturers to end-users, PTT Chemical, is now ready to team up with entrepreneurs, customers, and those who are interested, to lift up Thailand’s plastic industry. PTT Chemical Plc is Thailand’s leading petrochemical and plastic resins manufacturer with the Olefins production capacity of 1.8 million tons per year and the HDPE production capacity of 800,000 tons per year. In the fourth quarter of 2009 to early 2010, the company will start a commercial operation of its LLDPE and LDPE plants which will give a production capacity of 400,000 tons per year and 300,000 tons per year, respectively. With the new products soon to be launched to the market the company aims to offer more solutions as well as complete services to the market.
Monday, December 7, 2009
TETRA PAK AND BRASKEM SIGN AGREEMENT TO PILOT GREEN PLASTIC IN CARTON PACKAGING
Tetra Pak, the world leader in food processing and packaging solutions, has reached agreement with the largest Brazilian petrochemical company, Braskem SA, to purchase limited volumes of high-density polyethylene (HDPE) derived entirely from a renewable feedstock. The agreement represents the first move toward using green polyethylene in the carton packaging industry.
Braskem expects the world’s first commercial-scale green polyethylene plant, located in the south of Brazil, to come on stream late next year and is targeting first deliveries to Tetra Pak early in 2011. The new facility will use ethanol derived from sugar cane to produce ethylene, which will then be converted into polyethylene, the world’s most commonly used plastic. It is estimated that the process will result in an overall reduction in greenhouse gas emissions when compared with the traditional process for manufacturing polyethylene.
Under the terms of today’s agreement, Braskem will begin supplying Tetra Pak with 5 Ktons per year of green HDPE from 2011, for use in the production of plastic caps and closures. The volume represents just over 5% of the company's total HDPE demand, and is slightly less than 1% of its total plastics purchases.
“While this pilot project is a small first step into green polyethylene, it marks another milestone in our sustainability journey … and underscores our commitment to finding new ways to use renewable materials in our carton packaging,” said Tetra Pak President and Chief Executive Officer Dennis Jönsson.
“We are very pleased to partner with Tetra Pak to supply a viable renewable alternative to traditional polyethylene. This is another step our longstanding partnership as a Tetra Pak global supplier and demonstrates both companies' commitment to sustainable development,” said Braskem CEO Bernardo Gradin.
As the world’s leading supplier of wood fibre based carton packaging, the concept of renewable feedstock is well established within Tetra Pak and the company is active in promoting the use of responsibly managed resources. Tetra Pak is actively involved with the Forestry Stewardship Council (FSC) and is supporting the development of a sustainability certification standard to guide the production of renewable raw materials to supply the green plastics chain.
Tetra Pak is also a partner in the WWF Climate Savers Programme and is on track to meet its commitment to reduce global carbon emissions by 10% in absolute terms between 2005 and 2010.
In 2002 Braskem issued a public commitment related to its contribution to sustainable development, and it was the first Brazilian company to endorse the UNEP International Declaration on Cleaner Production. Since 2005 it has been listed on the Brazilian Stock Exchange Sustainability Index (ISE Bovespa). All its industrial plants are ISO 14001 certified. This year, in support of the climate change engagement movement, Braskem signed the Copenhagen Communiqué on Climate Change.
Braskem expects the world’s first commercial-scale green polyethylene plant, located in the south of Brazil, to come on stream late next year and is targeting first deliveries to Tetra Pak early in 2011. The new facility will use ethanol derived from sugar cane to produce ethylene, which will then be converted into polyethylene, the world’s most commonly used plastic. It is estimated that the process will result in an overall reduction in greenhouse gas emissions when compared with the traditional process for manufacturing polyethylene.
Under the terms of today’s agreement, Braskem will begin supplying Tetra Pak with 5 Ktons per year of green HDPE from 2011, for use in the production of plastic caps and closures. The volume represents just over 5% of the company's total HDPE demand, and is slightly less than 1% of its total plastics purchases.
“While this pilot project is a small first step into green polyethylene, it marks another milestone in our sustainability journey … and underscores our commitment to finding new ways to use renewable materials in our carton packaging,” said Tetra Pak President and Chief Executive Officer Dennis Jönsson.
“We are very pleased to partner with Tetra Pak to supply a viable renewable alternative to traditional polyethylene. This is another step our longstanding partnership as a Tetra Pak global supplier and demonstrates both companies' commitment to sustainable development,” said Braskem CEO Bernardo Gradin.
As the world’s leading supplier of wood fibre based carton packaging, the concept of renewable feedstock is well established within Tetra Pak and the company is active in promoting the use of responsibly managed resources. Tetra Pak is actively involved with the Forestry Stewardship Council (FSC) and is supporting the development of a sustainability certification standard to guide the production of renewable raw materials to supply the green plastics chain.
Tetra Pak is also a partner in the WWF Climate Savers Programme and is on track to meet its commitment to reduce global carbon emissions by 10% in absolute terms between 2005 and 2010.
In 2002 Braskem issued a public commitment related to its contribution to sustainable development, and it was the first Brazilian company to endorse the UNEP International Declaration on Cleaner Production. Since 2005 it has been listed on the Brazilian Stock Exchange Sustainability Index (ISE Bovespa). All its industrial plants are ISO 14001 certified. This year, in support of the climate change engagement movement, Braskem signed the Copenhagen Communiqué on Climate Change.
“INDORAMA VENTURES” SUBMITS FILING FOR EXCHANGE OFFER TO BUY IRP SHARES
Petrochemical producer Indorama Ventures Public Company Limited (IVL) has filed a registration statement and draft prospectus (the “Filing”) with the Office of the Securities and Exchange Commission (SEC) to offer IVL newly issued ordinary shares in exchange for shares of its subsidiary Indorama Polymers Public Company Limited (IRP) held by minorities of IRP shareholders.
The move is part of IVL’s shareholding and management restructuring plan, a significant step in preparation for being listed on the Stock Exchange of Thailand (SET). Bualuang Securities Public Company Limited is a financial advisor to IVL.
Under the shareholding and management restructuring plan, in preparation for initial public offering (IPO) and SET listing scheduled for early 2010. Concurrently, IVL will undertake the shareholding structuring between IVL and IRP. Once approved or waivers has been granted by concerned agencies, IVL will conduct a tender offer to exchange its newly issued ordinary shares for all IRP’s shares held by IRP minority shareholders. IRP will be subsequently delisted from the SET on the same day that IVL starts to trade its shares (including those under the tender offer and IPO) on the SET. IRP minority shareholders who accept the tender offer will be able to trade their shares simultaneously with IVL’s newly issued shares on the first trading date of IVL shares on the SET.
According to the shareholding and management restructuring plan, IVL will offer its newly issued ordinary shares as a consideration to IRP minority shareholders who accept the tender offer at a rate of 1.2320 IVL (Bt1 par value) shares for each IRP share (Bt1 par value) with no cash alternative. The total IRP shares that IVL will make a tender offer for are 424.48 million shares, accounting for 30.71 percent of total IRP’s paid-up shares. Such shareholding and management restructuring plan was approved by IRP extraordinary shareholders’ meeting on 27 October 2009.
IVL believes that the new shareholding structure will increase IVL’s transparency and eliminate any potential conflict of interest between IVL and IRP after IVL’s listing. In addition, IVL believes that the current minority shareholders of IRP will enjoy benefits from IVL’s integrated petrochemical value chain business through investments in its subsidiaries.
Editor’s note:
The information contained herein is not for publication or distribution, directly or indirectly, in or into the United States of America. The materials do not constitute an offer of securities for sale in the United States, nor may the securities be offered or sold in the United States absent registration or an exemption from registration as provided in the U.S. Securities Act of 1933, as amended, and the rules and regulations thereunder. There is no intention to register any portion of the offering in the United States of America or to conduct a public offering of securities in the United States of America.
The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities referred to herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration exemption from registration or qualification under the securities laws of any such jurisdiction.
The move is part of IVL’s shareholding and management restructuring plan, a significant step in preparation for being listed on the Stock Exchange of Thailand (SET). Bualuang Securities Public Company Limited is a financial advisor to IVL.
Under the shareholding and management restructuring plan, in preparation for initial public offering (IPO) and SET listing scheduled for early 2010. Concurrently, IVL will undertake the shareholding structuring between IVL and IRP. Once approved or waivers has been granted by concerned agencies, IVL will conduct a tender offer to exchange its newly issued ordinary shares for all IRP’s shares held by IRP minority shareholders. IRP will be subsequently delisted from the SET on the same day that IVL starts to trade its shares (including those under the tender offer and IPO) on the SET. IRP minority shareholders who accept the tender offer will be able to trade their shares simultaneously with IVL’s newly issued shares on the first trading date of IVL shares on the SET.
According to the shareholding and management restructuring plan, IVL will offer its newly issued ordinary shares as a consideration to IRP minority shareholders who accept the tender offer at a rate of 1.2320 IVL (Bt1 par value) shares for each IRP share (Bt1 par value) with no cash alternative. The total IRP shares that IVL will make a tender offer for are 424.48 million shares, accounting for 30.71 percent of total IRP’s paid-up shares. Such shareholding and management restructuring plan was approved by IRP extraordinary shareholders’ meeting on 27 October 2009.
IVL believes that the new shareholding structure will increase IVL’s transparency and eliminate any potential conflict of interest between IVL and IRP after IVL’s listing. In addition, IVL believes that the current minority shareholders of IRP will enjoy benefits from IVL’s integrated petrochemical value chain business through investments in its subsidiaries.
Editor’s note:
The information contained herein is not for publication or distribution, directly or indirectly, in or into the United States of America. The materials do not constitute an offer of securities for sale in the United States, nor may the securities be offered or sold in the United States absent registration or an exemption from registration as provided in the U.S. Securities Act of 1933, as amended, and the rules and regulations thereunder. There is no intention to register any portion of the offering in the United States of America or to conduct a public offering of securities in the United States of America.
The information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities referred to herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration exemption from registration or qualification under the securities laws of any such jurisdiction.
CLSA appoints Head of Sales Trading in Thailand and strengthens sales offering, after sweeping 2009 Asiamoney Poll
CLSA Asia-Pacific Markets, Asia's leading independent brokerage and investment group, has followed its impressive showing in Asiamoney’s annual Brokers Poll with the hire of two industry veterans to further augment the company’s sales and sales trading capabilities.
Michael Frost joins as Head of Sales Trading in Thailand, and institutional sales specialist Lilly Kulvanichpisit brings 17 years of experience to its sales team, both hires represent CLSA’s commitment to expansion in the country and ensuring excellence in execution and client management.
On his decision to join CLSA, Frost said, “CLSA's global reputation for dynamic sales trading, unparalleled product and unmatched growth is what attracted me to the firm. I’m excited to be part of the team."
The growing of the sales team comes just days after Asiamoney’s annual Brokers Poll results were published, with CLSA again voted Thailand’s top brokerage by global fund managers.
CLSA clearly leads Thailand for its research coverage, retaining the top position in Thailand for country research (No.1 in 2008), with CLSA Head of Research Andrew Stotz again ranking Thailand’s No.1 equity analyst (No.1 in 2008).
In addition to being recognised for its leading research, CLSA’s sales services and execution was named the best in Thailand, with the brokerage taking the No.1 place for Best Overall Sales Services for the third consecutive year, and Best in Sales Trading and Best Overall Execution for the second consecutive year respectively.
CLSA also took out the title of Most Improved Brokerage in the last 12 months for the second year running.
CLSA Thailand Country Head, Pekka Johnson, said the new hires were only going to strengthen the sales offering of CLSA Thailand, with both Frost and Kulvanichpisit bringing broad industry and market knowledge and expertise to the table.
“CLSA Thailand’s priority is offering our clients the absolute best in accurate analysis and unrivalled service, and we are committed to upholding the exceptional standards which they have come to expect.”
“I am delighted to welcome Frost and Kulvanichpisit to our team, and look forward to the contribution and enhancement they will offer.”
“The poll rankings are a reflection of a job well done by all at CLSA Thailand, and we intend to carry this momentum forward and continue our expansion into the coming year,” said Johnson.
About Michael Frost
Frost has spent the majority of the last decade in Asia having completed stints in both Bangkok and Singapore, where he was most recently working as Head of South East Asian Sales Trading at ICAP, before which he spent three years at Merrill Lynch as a Director of Sales Trading.
Frost not only brings with him extensive industry experience, but also energy, enthusiasm and leadership finesse that is sure to reinforce the already stellar performance of CLSA Thailand’s sales trading team.
He commenced his new role with CLSA Thailand on 23 November, 2009.
About Lilly Kulvanichpisit
Prior to accepting her role with CLSA Thailand, Kulvanichpisit was with Asia Plus Securities, where she served as Marketing Director since 2002. Prior to this she was with WI Carr, KGI Securities and Merrill Lynch in Institutional Sales.
Kulvanichpisit will start her new role in early December, 2009.
About CLSA Thailand
CLSA is one of the longest standing foreign brokers operating in Thailand and has been serving domestic and international fund managers from Bangkok since 1989.
CLSA Securities Thailand is a full member of the Stock Exchange of Thailand (“SET”) and in 2008 co-hosted with SET Thailand Focus, an investment forum for foreign and domestic Thai investors.
A dedicated team of award-winning analysts covers more than 40 Thai companies in the agribusiness, conglomerates, consumer, financials, healthcare, industrials, media, petrochemicals, oil and gas, property, telecoms and transport sectors.
About CLSA Asia-Pacific Markets
CLSA Asia-Pacific Markets is Asia’s leading, independent brokerage and investment group. The company provides equity broking, capital markets, merger and acquisition, and asset management services to global corporate and institutional clients.
Renowned for service excellence, product innovation and award-winning market intelligence, CLSA has built its reputation on unrivalled equity research and economic analysis which is consistently ranked the best in Asia.
CLSA is one of Asia’s largest independent equity brokers and one of the world’s largest agency brokers. The group’s investment banking services include M&A advisory, equity transactions and public offerings. Alternative asset management is offered through ten Asia-based funds under CLSA Capital Partners.
Founded in 1986 and headquartered in Hong Kong, CLSA has 1,350 dedicated professionals located in 15 Asian cities, plus Dubai, London, Port Louis (Mauritius) and New York. CLSA’s major shareholder is France's Credit Agricole, which merged in 2003 with Credit Lyonnais. CLSA enjoys substantial staff ownership which contributes to its independent stance and operations.
Michael Frost joins as Head of Sales Trading in Thailand, and institutional sales specialist Lilly Kulvanichpisit brings 17 years of experience to its sales team, both hires represent CLSA’s commitment to expansion in the country and ensuring excellence in execution and client management.
On his decision to join CLSA, Frost said, “CLSA's global reputation for dynamic sales trading, unparalleled product and unmatched growth is what attracted me to the firm. I’m excited to be part of the team."
The growing of the sales team comes just days after Asiamoney’s annual Brokers Poll results were published, with CLSA again voted Thailand’s top brokerage by global fund managers.
CLSA clearly leads Thailand for its research coverage, retaining the top position in Thailand for country research (No.1 in 2008), with CLSA Head of Research Andrew Stotz again ranking Thailand’s No.1 equity analyst (No.1 in 2008).
In addition to being recognised for its leading research, CLSA’s sales services and execution was named the best in Thailand, with the brokerage taking the No.1 place for Best Overall Sales Services for the third consecutive year, and Best in Sales Trading and Best Overall Execution for the second consecutive year respectively.
CLSA also took out the title of Most Improved Brokerage in the last 12 months for the second year running.
CLSA Thailand Country Head, Pekka Johnson, said the new hires were only going to strengthen the sales offering of CLSA Thailand, with both Frost and Kulvanichpisit bringing broad industry and market knowledge and expertise to the table.
“CLSA Thailand’s priority is offering our clients the absolute best in accurate analysis and unrivalled service, and we are committed to upholding the exceptional standards which they have come to expect.”
“I am delighted to welcome Frost and Kulvanichpisit to our team, and look forward to the contribution and enhancement they will offer.”
“The poll rankings are a reflection of a job well done by all at CLSA Thailand, and we intend to carry this momentum forward and continue our expansion into the coming year,” said Johnson.
About Michael Frost
Frost has spent the majority of the last decade in Asia having completed stints in both Bangkok and Singapore, where he was most recently working as Head of South East Asian Sales Trading at ICAP, before which he spent three years at Merrill Lynch as a Director of Sales Trading.
Frost not only brings with him extensive industry experience, but also energy, enthusiasm and leadership finesse that is sure to reinforce the already stellar performance of CLSA Thailand’s sales trading team.
He commenced his new role with CLSA Thailand on 23 November, 2009.
About Lilly Kulvanichpisit
Prior to accepting her role with CLSA Thailand, Kulvanichpisit was with Asia Plus Securities, where she served as Marketing Director since 2002. Prior to this she was with WI Carr, KGI Securities and Merrill Lynch in Institutional Sales.
Kulvanichpisit will start her new role in early December, 2009.
About CLSA Thailand
CLSA is one of the longest standing foreign brokers operating in Thailand and has been serving domestic and international fund managers from Bangkok since 1989.
CLSA Securities Thailand is a full member of the Stock Exchange of Thailand (“SET”) and in 2008 co-hosted with SET Thailand Focus, an investment forum for foreign and domestic Thai investors.
A dedicated team of award-winning analysts covers more than 40 Thai companies in the agribusiness, conglomerates, consumer, financials, healthcare, industrials, media, petrochemicals, oil and gas, property, telecoms and transport sectors.
About CLSA Asia-Pacific Markets
CLSA Asia-Pacific Markets is Asia’s leading, independent brokerage and investment group. The company provides equity broking, capital markets, merger and acquisition, and asset management services to global corporate and institutional clients.
Renowned for service excellence, product innovation and award-winning market intelligence, CLSA has built its reputation on unrivalled equity research and economic analysis which is consistently ranked the best in Asia.
CLSA is one of Asia’s largest independent equity brokers and one of the world’s largest agency brokers. The group’s investment banking services include M&A advisory, equity transactions and public offerings. Alternative asset management is offered through ten Asia-based funds under CLSA Capital Partners.
Founded in 1986 and headquartered in Hong Kong, CLSA has 1,350 dedicated professionals located in 15 Asian cities, plus Dubai, London, Port Louis (Mauritius) and New York. CLSA’s major shareholder is France's Credit Agricole, which merged in 2003 with Credit Lyonnais. CLSA enjoys substantial staff ownership which contributes to its independent stance and operations.
TRIS Rating Affirms Company Rating of “BCP” at “BBB+/Positive” and Affirms Issue Rating of “SIAMDR” at “AA/Stable”
TRIS Rating Co., Ltd. has affirmed the company rating of The Bangchak Petroleum PLC (BCP) at “BBB+” with “positive” outlook. The rating reflects BCP’s satisfactory refinery operations, strengthened balance sheet, and integration and support from PTT PLC (PTT). The rating also takes into consideration the fluctuations in oil prices and gross refining margins as well as declining demand for refined petroleum products.
The “positive” outlook reflects the expectation that BCP’s new cracking unit will alleviate the existing refinery limitations and yield more high-value refined products. The flexibility in operating two crude distillation unit (CDU) trains will enable BCP to capture new opportunities to maximize gross refining margin and help BCP weather the down cycles of the refining business.
TRIS Rating reported that BCP was established in 1985 and listed on the Stock Exchange of Thailand (SET) in 1993. The company owns and operates an oil refinery located in Bangkok with a capacity of 120 thousand barrels per day (KBD). The company also operates approximately 1,000 service stations under the “Bangchak” brand. After a capital increase in May 2006, PTT became the major shareholder of BCP. As of April 2009, PTT held 29.7% of BCP, the Ministry of Finance (MOF) held 11.2%, and the remaining 59.1% was held by the public. As a simple refinery, BCP produces a higher portion of fuel oil, which is a lower-value product, than a complex refinery. The average product mix during 2005 to 2009 was diesel (35%), fuel oil (32%), gasoline (17%) and other refined products (16%).
TRIS Rating said about BCP’s operating performance that it has continuously improved. The refinery utilization rate increased from 48% in 2006 to 69% for the first half of 2009 as the company has been able to export premium-grade fuel oil to China and Japan. Cheaper domestic crude now makes up a larger portion of stock feed needs. Higher selling prices for premium-grade fuel oil plus a substantial gain from hedging pushed BCP’s total gross refining margin (GRM) to US$13.08 per barrel for the first half of 2009. The marketing margin of BCP improved continually in the second half of 2008 through the first half of 2009, after recording a negative margin in the first half of 2008. BCP could adjust retail prices in line with changes in the ex-refinery prices, resulting in a favorable marketing margin of Bt0.64 per liter in the first half of 2009. Combining the refining and marketing businesses, earnings before interest, tax, depreciation and amortization (EBITDA) improved to Bt7,094 million in the first half of 2009 from Bt4,384 million in first half of 2008.
The product quality improvement (PQI) project will enhance BCP’s refinery performance and gross refining margin. The refinery will be able to process more varieties of crude, especially heavy and sour crude. The proportion of gasoline and middle distillates is expected to increase from the existing level of 64% to 82%. In addition, two trains of CDU, operating at 80 KBD and 40 KBD, may enhance gross refining margin. The CDU with 80 KBD of capacity may be utilized as a complex refinery to maximize the amount of gasoline and middle distillates produced. The other CDU may operate as a simple refinery to produce very low sulfur fuel oil (FOVS) for export.
TRIS Rating said, BCP’s capital structure remained healthy, with a debt to capitalization ratio of 42.5% as of June 2009. The construction of the cracking unit and the bio-diesel plant have been completed and will be ready for the Commercial Operation Date (COD) in late 2009. BCP’s capital expenditures in the coming years will be moderate and the debt to capitalization ratio is expected to maintain at 40%-45%.
TRIS Rating sees the global economic slowdown has reduced demand for refined petroleum products. New refining capacity in the Asia-Pacific region during 2009-2011 would possibly lead to a regional over-supply situation and, in turn, put more pressure on gross refining margin.
At the same time, TRIS Rating has also affirmed the “AA” rating with “stable” outlook for the Bt4,000 million in depository receipts on BCP’s subordinated convertible debentures (BCP141A) issued by Siam DR Co., Ltd. (SIAMDR). The rating reflects the credit support, in terms of principal protection, provided by the Ministry of Finance (MOF) to buy back the issue at the original offering price should BCP be unable to make the scheduled payments on time. The rating also reflects the additional security elements embedded in the transaction structure and the credit quality of the underlying issuer, BCP. The “stable” outlook for the depository receipts is derived from the principal protection provided by the MOF and the credit quality of BCP.
The “positive” outlook reflects the expectation that BCP’s new cracking unit will alleviate the existing refinery limitations and yield more high-value refined products. The flexibility in operating two crude distillation unit (CDU) trains will enable BCP to capture new opportunities to maximize gross refining margin and help BCP weather the down cycles of the refining business.
TRIS Rating reported that BCP was established in 1985 and listed on the Stock Exchange of Thailand (SET) in 1993. The company owns and operates an oil refinery located in Bangkok with a capacity of 120 thousand barrels per day (KBD). The company also operates approximately 1,000 service stations under the “Bangchak” brand. After a capital increase in May 2006, PTT became the major shareholder of BCP. As of April 2009, PTT held 29.7% of BCP, the Ministry of Finance (MOF) held 11.2%, and the remaining 59.1% was held by the public. As a simple refinery, BCP produces a higher portion of fuel oil, which is a lower-value product, than a complex refinery. The average product mix during 2005 to 2009 was diesel (35%), fuel oil (32%), gasoline (17%) and other refined products (16%).
TRIS Rating said about BCP’s operating performance that it has continuously improved. The refinery utilization rate increased from 48% in 2006 to 69% for the first half of 2009 as the company has been able to export premium-grade fuel oil to China and Japan. Cheaper domestic crude now makes up a larger portion of stock feed needs. Higher selling prices for premium-grade fuel oil plus a substantial gain from hedging pushed BCP’s total gross refining margin (GRM) to US$13.08 per barrel for the first half of 2009. The marketing margin of BCP improved continually in the second half of 2008 through the first half of 2009, after recording a negative margin in the first half of 2008. BCP could adjust retail prices in line with changes in the ex-refinery prices, resulting in a favorable marketing margin of Bt0.64 per liter in the first half of 2009. Combining the refining and marketing businesses, earnings before interest, tax, depreciation and amortization (EBITDA) improved to Bt7,094 million in the first half of 2009 from Bt4,384 million in first half of 2008.
The product quality improvement (PQI) project will enhance BCP’s refinery performance and gross refining margin. The refinery will be able to process more varieties of crude, especially heavy and sour crude. The proportion of gasoline and middle distillates is expected to increase from the existing level of 64% to 82%. In addition, two trains of CDU, operating at 80 KBD and 40 KBD, may enhance gross refining margin. The CDU with 80 KBD of capacity may be utilized as a complex refinery to maximize the amount of gasoline and middle distillates produced. The other CDU may operate as a simple refinery to produce very low sulfur fuel oil (FOVS) for export.
TRIS Rating said, BCP’s capital structure remained healthy, with a debt to capitalization ratio of 42.5% as of June 2009. The construction of the cracking unit and the bio-diesel plant have been completed and will be ready for the Commercial Operation Date (COD) in late 2009. BCP’s capital expenditures in the coming years will be moderate and the debt to capitalization ratio is expected to maintain at 40%-45%.
TRIS Rating sees the global economic slowdown has reduced demand for refined petroleum products. New refining capacity in the Asia-Pacific region during 2009-2011 would possibly lead to a regional over-supply situation and, in turn, put more pressure on gross refining margin.
At the same time, TRIS Rating has also affirmed the “AA” rating with “stable” outlook for the Bt4,000 million in depository receipts on BCP’s subordinated convertible debentures (BCP141A) issued by Siam DR Co., Ltd. (SIAMDR). The rating reflects the credit support, in terms of principal protection, provided by the Ministry of Finance (MOF) to buy back the issue at the original offering price should BCP be unable to make the scheduled payments on time. The rating also reflects the additional security elements embedded in the transaction structure and the credit quality of the underlying issuer, BCP. The “stable” outlook for the depository receipts is derived from the principal protection provided by the MOF and the credit quality of BCP.
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