TEXT-S&P Rates PTT Public Co. Ltd.'s Senior Unsecured Notes 'BBB+'


(The following was released by the rating agency)

SINGAPORE (Standard & Poor's) Oct. 11, 2012 -- Standard &Poor's Ratings Services today assigned its 'BBB+' issue ratingto a proposed issue of senior unsecured notes by PTT Public Co.Ltd (PTT: BBB+/Stable/--). The rating on the notes reflects thelong-term corporate credit rating on PTT.

The rating on PTT reflects the company's 'bbb' stand-alonecredit profile (SACP) and an extremely high likelihood ofextraordinary support from the government of Thailand (foreigncurrency BBB+/Stable/A-2; local currency A-/Stable/A-2;axAA/axA-1) in the event of financial distress.

PTT's business risk profile is "satisfactory," as ourcriteria define the term. The PTT group dominates all majorsegments of oil and gas exploration and production; gastransmission, distribution, and separation; and petrochemicaland refining in Thailand. PTT's profitability is lower than thatof other integrated national energy companies, reflecting thecompany's dominant marketing and trading business and thetransmission-like nature of its gas business.

We expect PTT's cash flow adequacy ratios to moderate in2012-2014 due to the company's peak capital expenditurerequirements of Thai baht (THB) 233.9 billion during this time,mainly for its upstream and gas businesses. This amount does notinclude the capital expenditure requirements of PTT'smajority-owned subsidiary PTT Exploration and Production PublicCo. Ltd. (PTTEP: BBB+/Negative/--). It also does not includePTT's investment in PTTEP's equity-raising plan.

We expect PTT to generate negative free operating cash flowson a consolidated basis in 2012 and 2013 and use debt topartially fund the capital investments. Pro forma for theproposed notes issue, we forecast the consolidated average ratioof funds from operations (FFO; not including associate income)to total debt at 30%-35% over 2012-2014. These measures remainadequate for PTT's "intermediate" financial risk profile, as ourcriteria define the term. The company also maintains someflexibility in its investment plans. About 50% of its plannedcapital expenditure over 2012-2014 is related to mergers andacquisitions and is discretionary.

The stable outlook on PTT reflects the outlook on thesovereign credit rating on Thailand. We could upgrade PTT if weraise the sovereign credit rating, and the company maintains orimproves its SACP. We may downgrade PTT if: (1) we lower thesovereign credit rating on Thailand; (2) the government'sshareholding in PTT held by the Ministry of Finance falls below50%; (3) the government's energy policy shifts significantly,including liberalization of the gas industry, thus eroding PTT'smarket share; or (4) PTT's SACP weakens by more than fournotches, which we consider highly unlikely.


-- Methodology: Business Risk/Financial Risk MatrixExpanded, Sept. 18, 2012

-- Key Credit Factors: Criteria For Rating The GlobalMidstream Energy Industry, April 18, 2012

-- Standard & Poor's Raises Its Oil Price Assumptions;Natural Gas Price Assumptions Unchanged, March 22, 2012

-- Global Criteria For Rating The Oil And Gas ExplorationAnd Production Industry, Jan. 20, 2012

-- Key Credit Factors: Criteria For Rating The Global OilRefining Industry, Nov. 28, 2011

-- Rating Government-Related Entities: Methodology AndAssumptions, Dec. 9, 2010

-- Stand-Alone Credit Profiles: One Component Of A Rating,Oct. 1, 2010

-- Business And Financial Risks In The Commodity AndSpecialty Chemical Industry, Nov. 20, 2008

-- 2008 Corporate Criteria: Analytical Methodology, April15, 2008