Fitch puts Thai Beverage on positive watch

Fitch Ratings said it placed Thai Beverage PCL’s long-term foreign-currency issuer default rating of BBB-, national long-term rating of AA(tha) and senior unsecured AA (tha) on rating watch positive.

This positive watch reflects ThaiBev’s Thursday announcement it intends to spin-off a minority share in its subsidiary, BeerCo Ltd. This newly formed company will hold ThaiBev’s beer businesses in Thailand and Vietnam, the agency said.

“We may upgrade ThaiBev’s ratings if the spinoff is completed, leading ThaiBev’s fund flow from operations (FFO) net leverage to be on track to fall below 3.5x. We would affirm ThaiBev’s rating with a stable outlook if the spinoff is not completed as planned, with the rating supported by strong operating performance and robust free cash flow (FCF), which should allow the company to reduce FFO net leverage to around 4x by the financial year ending September 2022 (FY22) and below 4x thereafter, notwithstanding the pandemic-led downturn,” the agency said.

Fitch said it foresees resolving the RWP on ThaiBev’s ratings on completion of the spinoff, which could take longer than the typical six-month period for rating watches.

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