TEXT-Fitch Rates Krung Thai Bank's Subordinated Debentures 'AA(tha)'

(The following was released by the rating agency)

BANGKOK/SINGAPORE, October 12 (Fitch) Fitch Ratings (Thailand) has assigned Krung Thai Bank Public Company Limited's (KTB; 'AA+(tha)'/Outlook Stable) upcoming unsecured subordinated debentures of up to THB15bn, with an option to issue a further amount of up to THB10bn, a National Long-Term rating of 'AA(tha)'.

The debentures will have a maturity of 10 years but will be callable after five years. The proceeds will be used to strengthen the bank's Tier 2 capital and refinance its maturing subordinated debentures.

KTB's rating is based on Fitch's expectation of state support for the bank in case of need. This based on the bank's strong linkages with the government through the latter's ownership, control and evidence of support. The bank's large size and systemic importance also make government support likely in times of distress. A change in Thailand' ratings could affect KTB's Long- and Short-Term ratings.

The rating of KTB's subordinated debentures, which is one notch below the bank's issuer rating, takes into account Fitch's view that state support could be extended to these debt instruments.

KTB is Thailand's second-largest commercial bank by consolidated assets with an 18% market share at end-June 2012. Its major shareholder, with a 55% stake, is Financial Institutions Development Fund, a unit under the Bank of Thailand.