Tris assigns BBB to TTA for unused vessels
Tris Rating gave Thoresen Thai Agencies Plc (TTA) a BBB company rating as well as affirming the same rating for its existing unsecured debentures.
BBB is considered a lower mediumgrade rating, on the lower end of bonds considered “investment-grade”.
The credit rating agency also gave a BBB to a new TTA issuance of 1.5 billion baht of senior unsecured debentures that will be used to secure new dry-bulk vessels as well as for working capital.
TTA is a company that specialises in shipping, offshore oil drilling, agrichemicals and various investments such as franchising Pizza Hut in Thailand.
Tris expects the dry-bulk shipping and offshore sectors will continue to be the main drivers of revenue for TTA. The company’s dry-bulk shipping segment improved substantially in the first half of 2018, with revenue from its fleet increasing substantially while costs remained stable.
However, TTA’s offshore services continued to suffer from too many underutilised vessels and a decline in non-vessel revenue.
Three of its four main offshore vessels were out of service due to maintenance, causing an order backlog of US$165 million (5.35 billion baht). The segment is expected to improve because of high oil prices.
The ratings agency also said TTA would likely maintain strong liquidity and do a good job at servicing its debt over the next year.
Tris does not think a ratings upgrade is likely in the near future because of general uncertainties involved in the shipping and oil industries. TTA would have to exceed Tris’s earnings projections, probably by further diversifying their investment portfolios.
TTA is trying to branch out, recently announcing an investment to bring the popular US-based Taco Bell to Thailand. This summer TTA also invested in the South Korean e-commerce site 11street.
The rating also has the potential to be lowered if TTA takes substantial hits to profits from its main shipping and offshore segments, as well as if its recent investments result in heavy losses.