PTT Global Chemical Public Co. Ltd.

The stable outlook on GC reflects the outlook on the company's parent, PTT Public Co. Ltd. (PTT), given our view of strong ties between the two companies. It also reflects the company's stable operations and healthy cash adequacy over the pricing cycle. We could lower the rating on GC if any of the following occurs: We downgrade PTT. We lower GC's stand-alone credit profile (SACP) by two notches on the view it has lower strategic relevance to PTT. This could be due to lower PTT's shareholding in GC or the parent's business integration shifts considerably. We will revise GC's 'bbb-' SACP downward if the company's debt-to-EBITDA ratio permanently increases above 3.0x. We could raise the rating on GC if: We

...More growth appetite with plenty of debt headroom. PTT Global Chemical Public Co. Ltd.'s (GC) acquisitions of downstream businesses in 2018, along with joint ventures established that year, reflect the company's increasing growth appetite in downstream petrochemical products. The company plans to complete integration of its upstream-to-downstream assets by 2022. While the plan is mostly in the study phase, we believe the company has debt headroom to accommodate expansion after it completes ongoing projects in 2020. Final investment decision on the U.S. cracker could elevate the leverage level. We expect GC will reach final investment decision on the ethylene cracker project in the U.S. by the end of 2019. The project will increase GC's scale and geographic diversity and expose the company to a low-cost ethylene market, which benefits from cheap supply from the U.S. shale industry. The financial implications are still unclear, but we expect GC to have some financial headroom to absorb part...

Full Report