TRIS Rating affirms the company rating of BCPG Public Company Limited (BCPG) at A- with a stable rating outlook. At the same time, TRIS Rating assigns the rating of A- to BCPGs proposed issue of up to THB10 billion in senior unsecured debentures. The proceeds from the new debentures will be used mainly for refinancing its secured loans.
The ratings reflect BCPGs revenue stability from its well diversified power-generating assets, and the expected support from its parent, Bangchak Corporation Public Company Limited (BCP, rated A-/Stable by TRIS Rating). Contrarily, the ratings are constrained by BCPGs execution risks associated with projects under development, and rising country risk from its overseas investments. We also expect that BCPGs financial leverage will remain elevated over the course of ongoing expansions.
The company rating on BCPG also mirrors our view that BCPG is a core subsidiary of BCP. It incorporates a one-notch uplift from BCPG’s stand-alone credit profile (bbb+) to the same level as the rating on BCP. We expect BCPG will maintain its group status in the foreseeable future.
For the first three months of 2021, BCPG’s revenue increased by 18.1% year-on-year (y-o-y) to THB1.05 billion. The higher revenue reflects the full contribution from its hydropower generating assets in the Lao Peoples Democratic Republic (Lao PDR). The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) were THB853 million. As of March 2021, the company’s debt to EBITDA ratio was 3.9 times. We forecast the ratio will rise to about 8 times towards the end of 2021 before dropping to 6-7 times during 2022-2023.
On a consolidated basis, BCPG reported THB26 billion of debt as of March 2021. Of the total, approximately THB22 billion were considered priority debt, comprising secured debt owed by BCPG (THB14.5 billion) and all debts owed by its subsidiaries (THB7.5 billion). In effect, the ratio of priority debt was about 85%. However, we expect the priority debt ratio will drop to about 45% after the issuance of new debentures as BCPG will use the proceeds from the new debentures mainly to repay its secured debt. On that basis, we rate the proposed issue at the same level as the company rating.