Fitch rates Siam Cement debenture A+(tha)

Fitch Ratings said it affirmed The Siam Cement plc's national long-term rating at A+(tha) with stable outlook and national short-term rating at F1(tha), along with the A+(tha) ratings on the company's outstanding senior unsecured debentures. The agency assigned A+(tha) ratings to Siam Cement's upcoming THB15 billion senior unsecured debentures No.1/2007 due 2011. The new debentures will be used to refinance the company's maturing debentures and to invest in new projects.

The ratings are based on the company's good revenue diversification, its leading position and strong brand recognition in the domestic market, strong cash flow generation and a moderate financial leverage target, Fitch said.

Nonetheless, Siam Cement faces continued margin pressure due to rising energy costs, the impact from large excess supply and competitive operating environment in its core businesses. Other key credit concerns include high execution risks of new investments and exposure to contingent liabilities, Fitch said.

Despite some rise in net debt to THB103 billion at the end of 2006 from THB101 billion in 2005, the group's net debt-to-EBITDA ratio improved marginally to 2.2x in 2006 from 2.3x in 2005, the agency added.

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