Fitch rates Bank of Ayudhya notes AA+(tha)

Fitch Ratings said it assigned a national long-term rating of AA+(tha) to Bank of Ayudhya PCL's upcoming issue of Thai baht-denominated Basel III-compliant subordinated unsecured notes.

The debentures, which will be included in the bank's tier 2 capital, will have a tenor of 10 years and six months with an option to redeem after five years, Fitch said. The total issue size will be up to 10 billion in Thai baht.

The notes are rated one notch below the bank's national long-term rating to reflect their subordinated status and higher loss-severity risk compared to senior unsecured instruments, the agency said.

The ratings reflect a belief that the bank is a strategically important subsidiary of its parent, the Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU).

BTMU holds 76.9% of Bank of Ayudhya and the Thai bank is a key part of the parent's strategy for Southeast Asia, Fitch explained.

Any change in the national ratings of the Bank of Ayudhya would affect the ratings of the notes, the agency said.

Bank of Ayudhya’s ratings also could be negatively impacted if BTMU shows a reduced propensity to support it, Fitch added.

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