TRIS Rating, a leading credit rating agency in Thailand, has downgraded the credit rating of Bangchak Corporation Public Company Limited’s (BCP) subordinated perpetual bonds worth 10 billion baht from “intermediate equity content” to “no equity content.” This downgrade affects Bangchak’s financial structure and could impact investors holding these bonds.
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The downgrade is due to Bangchak’s expressed intention to redeem these subordinated bonds before maturity, using funds from the issuance of new, non-subordinated bonds. TRIS Rating views this decision as reflecting Bangchak’s intention to move away from using subordinated bonds as a long-term financing tool.
The downgrade of the subordinated bonds’ credit rating will lead to higher financing costs for Bangchak in future bond issuances. Additionally, the decision to redeem the bonds early could affect the company’s image among investors,potentially making it more challenging to raise funds in the future.
Impact on Investors
For investors holding Bangchak’s subordinated bonds, the downgrade could decrease the value of their investments.Furthermore, if Bangchak proceeds with the early redemption, investors might receive lower returns than expected.
This downgrade of Bangchak’s subordinated bonds is a noteworthy event in the Thai financial landscape. It reflects a shift in the financial management strategies of large corporations and could influence investor decisions in the future.
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