Fitch affirms Aromatics ratings

Fitch Ratings said it affirmed the rating for The Aromatics (Thailand) Public Co. Ltd.'s Thai baht 8 billion and Thai baht 4 billion secured amortizing debentures at long-term national BBB+(tha). The outlook is stable.

Fitch said the ratings reflect The Aromatics' strong ownership structure and support from PTT plc., Thailand's state-owned oil and gas company, The Aromatics' secured long-term feedstock supply and aromatics sales agreements, its cost-competitive position, plus the credit enhancement structure in place.

The credit enhancement is based on the seniority of its debt, its security over its operating plant and machinery and its committed cash deficiency support line of $90 million from PTT. Most of The Aromatics' production output is sold to PTT under long-term agreements, while most of its feedstock is sourced from PTT.

Fitch said the ratings also take into account The Aromatics' relatively high financial leverage and the cyclical nature of the petrochemical industry. The Aromatics' financial position was severely affected by the Thai baht devaluation due to unhedged foreign currency loans following the economic crisis of 1997 as well as by the cyclical downturn during that period. ATC's financial position improved substantially in 2003 owing to the recovery of product prices.

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