Fitch rates Krung Thai Bank hybrid A(tha)

Fitch Ratings said it assigned a national rating of A(tha) to Krung Thai Bank PCL's hybrid tier 1 securities of up to 9 billion in Thai baht to be issued in the domestic market.

These are non-cumulative, perpetual securities with a call option exercisable after five years from the issuance date, with the ability to absorb losses on a going-concern basis.

The hybrid is rated two notches below the bank's implied unsupported national long-term rating of AA-(tha) based on the bank's stand-alone financial strength, particularly its strong capital and large retained earnings, Fitch said.

However, if a bank reports a loss, the coupons can only be paid if payment is approved by the board on a case-by-case basis, taking into account a commercial bank's financial strength, such as capital, profitability and retained earnings, the agency said.

In this regard, Fitch said it believes that such approval would be given even if the bank reported a loss in light of the bank's current level of capital and retained earnings.

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