Fitch rates KTB Securities notes BB-(tha)

Fitch Ratings said it assigned a national long-term rating of BB-(tha) to KTB Securities (Thailand) PCL's upcoming issue of up to 400 million in Thai baht in subordinated debentures.

The debentures will have a maturity of 1.5 years.

The proceeds will be used as working capital for its securities brokerage businesses, Fitch said.

The subordinated debentures are rated one notch lower than KTB's national long-term rating of BB(tha) to reflect their higher loss-severity risk relative to senior unsecured instruments, the agency said.

Subordinated noteholders rank after senior creditors in the priority of claims.

Additional notching has not been applied to the subordinated debentures due to the lack of going-concern loss-absorption and equity-conversion features, Fitch said.

KTB's national ratings are based on its standalone financial profile and reflect its small domestic franchise and weak financials compared with other Thai securities, the agency said.

The ratings are supported by a new management team that has turned around the company's successive net losses prior to 2016, Fitch said.

Nonetheless, Fitch said it expects KTB's improving performance to remain more volatile than that of domestic rated peers over the medium-term due to its weaker franchise, the agency said.

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