OREANDA-NEWS. Fitch Ratings (Thailand) has affirmed Bangkok Commercial Asset Management Company Limited's (BAM) National Long-Term Rating at 'AA-(tha)', with a Negative Outlook.

A full list of rating actions is at the end of this commentary.

KEY RATING DRIVERS

BAM's National Ratings are supported by its status as a state enterprise that is 100% owned by the Financial Institutions Development Fund (FIDF), which is a unit of the central bank. There is implicit regulatory assistance (such as in the classification of BAM's notes as banks' liquid assets) that support its funding abilities. BAM is the largest player in Thailand's impaired asset management sector, and thus plays a key role in the local financial system. It has had a sound operating performance with consistent profitability.

The Negative Outlook is driven by the FIDF's ongoing studies on divesting part of its stake in BAM. Details on any divestment have not been finalised and the timeline remains unclear. Nevertheless these efforts likely indicate that the state may have reduced propensity to extend extraordinary support to BAM over the medium term.

RATING SENSITIVITIES

A clear indication from the state of the importance of BAM in its plans for the financial sector, or a long-term commitment to maintain BAM's status as a wholly-owned state enterprise with attendant regulatory benefits, would lead to a revision of the Outlook to Stable and potentially a re-assessment of the National Long-Term Rating.

A significant reduction in the propensity of the state to support BAM, such as through a large reduction in its shareholding or reduced regulatory advantages, could lead to negative rating action. In particular, a reduction of the government's stake to below 50% could lead to a multiple-notch downgrade of the National Long-Term Rating, though the final rating would also depend on the ultimate financial profile and the continuation of state linkages.

The rating actions are as follows:

National Long-Term Rating affirmed at 'AA-(tha)'; Outlook Negative
National Short-Term Rating affirmed at 'F1+(tha)'
National Long-Term Rating on senior unsecured bonds affirmed at 'AA-(tha)'.