S&P rates Krung Thai Bank

Standard & Poor's said it assigned its BB rating to the proposed $150 million floating-rate certificates of deposit due 2009 by Thailand's Krung Thai Bank Public Co. Ltd. (BB/positive/B).

S&P said the ratings on Krung Thai Bank reflect the bank's stand-alone credit profile, as well as the implicit support from its majority ultimate owner, the government of Thailand (foreign currency BBB/positive/A-2; local currency A/positive/A-1), in light of the bank's involvement in public policy projects. The role involves, among other activities, the bank providing credit to important economic sectors and for the implementation of government policies.

Although the degree of implicit support is likely to diminish gradually as the government proceeds with its plan to privatize the bank, the emphasis is likely to shift to the bank's own financial measures and its ability to enhance its financial profile as it becomes more commercially focused and as economic conditions improve.

S&P said constraining the ratings on the bank, however, are asset quality concerns from the legacy of policy directed lending, rapid loan growth in recent years, and the relatively high migration rate of restructured loans to nonperforming status.

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