Fitch Rates KASIKORNBANK's Short-Term Debentures at 'F1+(tha)

Tuesday 15 June 2021 09:33
Fitch Ratings (Thailand) has assigned KASIKORNBANK Public Company Limited's (KBank, BBB/AA+(tha)/Stable/bbb) upcoming euro-denominated senior unsecured short-term debentures a National Short-Term Rating of 'F1+(tha)'.

The notes will be issued under the bank's THB30 billion medium-term note programme, which allows for issuance in both Thai baht and foreign currencies. The debentures will be issued in two tranches, with tenors of 175 days and 198 days, and offered to institutional investors via a private placement.

- KEY RATING DRIVERS

Fitch rates KBank's euro-denominated senior unsecured short-term debentures at the same level as the bank's National Short-Term Rating of 'F1+(tha)'. This is in line with Fitch's criteria, since the senior notes constitute the bank's unsecured and unsubordinated obligations.

KBank's National Ratings are driven by its standalone profile, which reflects its strong domestic banking franchise, strength in digital and transactional banking and broadly stable funding profile. This is balanced by some pressure on its financial profile from the pandemic-related economic disruption in 2020 and the slow recovery that we expect in 2021-2022.

KBank's National Ratings are also determined following a comparison with other entities rated on the Thai national scale. For more details on KBank's rating drivers and sensitivities, see Fitch Affirms KASIKORNBANK's IDR at 'BBB'; Support Rating Floor Revised to 'BBB

- RATING SENSITIVITIES

Factors that could, individually or collectively, lead to positive rating action/upgrade:

Positive rating action on KBank's National Short-Term Rating and on the notes is not possible, as the ratings are at the highest level on the scale.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

A downgrade of KBank's National Long-Term Rating to below 'AA-(tha)' could lead to a downgrade of its senior unsecured notes' National Short-Term Rating. However, this is unlikely to occur in the near-term due to Stable Outlook on the bank's ratings. The recently revised up Support Rating Floor also limits downside to KBank's rating.

Unless noted above, the sensitivities for KBank's National Ratings are those outlined in our rating action commentary on 26 March 2021.

- BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit www.fitchratings.com/…0111579

Source: Fitch Ratings