October 1, 2014 / 5:03 AM / 3 years ago

Fitch: Thailand's Ratings Remain Resilient

(The following statement was released by the rating agency) BANGKOK, October 01 (Fitch) Fitch Ratings (Thailand) Limited, which held its annual conference in Bangkok today, said that Thailand's sovereign and financial institution ratings remain supported by fundamental strengths, although there remain downside risks such as relatively weak global growth and a challenging domestic operating environment. M.R. Pridiyathorn Devakula, Deputy Prime Minister, was the guest of honour at the event and provided the keynote opening address. During the conference, Heads of Fitch's analytical teams discussed the outlook, key risks, and rating implications for their respective sectors. Mr. James McCormack, Global Head of Sovereigns, noted that while sovereign credit ratings in Developed Markets - particularly the Eurozone - have stabilised in 2014, government debt levels remain elevated, underscoring the need for continued fiscal consolidation to ensure debt sustainability. This is made more difficult, however, by relatively weak growth prospects. Emerging Market ratings have also stabilised this year, with fewer upgrades and Outlook changes. As US monetary policy normalises, there is likely to be some pressure on Emerging Market external funding conditions, though most of Emerging Asia, including Thailand, is relatively well positioned in this regard. Thailand's ratings are supported at 'BBB+'/Stable by the strength of its external finances, moderate public indebtedness and by a credible monetary policy framework. Mr. McCormack noted that these fundamental strengths have repeatedly helped the economy to bounce back from natural disasters and political turbulence over the past decade. However, the Thai economy has settled around an average growth rate of 3% to 3.5%, which looks sluggish compared with regional and rating peers. The average for six Fitch-rated ASEAN economies was 5.6% over 2010-2014. A key question is whether Thailand can recapture a stronger growth rate - which may require growth-enhancing structural reforms including infrastructure development. This relatively weaker growth is among the challenges faced by the Thai insurance industry. However, other key challenges for Thai life insurers are more similar to prospects for the region as a whole, said Mr. Jeffrey Liew, Fitch's Head of Insurance - Asia Pacific. Mr. Liew commented that the future landscape for life insurance across the region, including Thailand, will be shaped by changing consumer needs, tightening regulatory requirements, and gradual shifts in the investment mix. Some life insurers will view these changes as opportunities to fortify their market positions. Revisiting business strategies could be pivotal for many industry players to remain competitive. Mr. Ambreesh Srivastava, Fitch's Head of Financial Institutions - South and Southeast Asia, noted that the regional operating environment remains challenging for banks, with greater downside risks from rapid credit growth, increased household debt, and rising economic linkages of most Southeast Asian economies with China. However, regional banking systems generally have sound buffers, and should be able to manage these risks, which explains the Stable rating Outlooks on most banks in the region. Thai banks have also built acceptable buffers in capitalisation and reserve coverage. Thailand's recent slowdown has not led to large-scale new non-performing loans, and Thai banks too should remain resilient in the event of a normal economic downturn. A roundtable discussion then addressed prospects for Thailand's economy and capital markets. The panellists comprised Dr. Kirida Bhaopichitr, Senior Economist, World Bank; Mr. Yingyong Nilasena, CFA, Deputy Secretary-General, Government Pension Fund; and Mr. Anucha Laokwansatit, General Manager and Chief Investment Officer, AIA Company Limited. The discussion was moderated by Mr. Vincent Milton, Managing Director of Fitch Ratings (Thailand) Limited. The conference was attended by over 300 senior executives and officials across the investor, regulatory, financial and corporate sectors. Contact: Vincent Milton Managing Director +66 2108 0169 vincent.milton@fitchratings.com Fitch Ratings (Thailand) Limited Park Ventures Level 17, 57 Wireless Road, Lumpini Patumwan, Bangkok 10330 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available at www.fitchratings.com. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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