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 Investment
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31 Oct 06 14:52
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Thailand Foreign And Local Long-Term Currency Ratings Affirmed; Outlook Stable, Off Watch
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- It is, perhaps, the attention to detail that sets Falcon Hill apart from other luxury properties in Thailand.
Kim Falcon Ravn, Denmark
Managing Director
Visit Falcon Hill, Hua-Hin
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SINGAPORE, Oct. 31, 2006 - Standard & Poor's Ratings Services today
affirmed its 'BBB+/A-2' foreign currency and 'A/A-1' local currency
sovereign credit ratings on the Kingdom of Thailand (Thailand) and
removed them from CreditWatch. The outlook is stable. The ratings were
originally placed on CreditWatch with negative implications on Sept. 19,
2006, following a military coup in the country.
"The affirmation of the credit ratings on Thailand reflects Standard &
Poor's view that the country's credit fundamentals remain supportive of
its current ratings in the wake of the military coup," said Standard &
Poor's credit analyst Kim Eng Tan.
Non-constitutional changes in governments are highly unusual among
sovereigns with credit ratings similar to Thailand, and typically have
negative implications for creditworthiness. Nevertheless, the security
and policy risks arising from the latest regime change in Thailand have
largely dissipated since the military takeover, principally due to the
assurance of a swift return to political stability.
Furthermore, Thailand's economic and financial indicators remain
stronger than similarly-rated sovereigns and are not expected to
deteriorate significantly in the short-to-medium term. Real GDP growth
for the next three years is projected to average just below 5%. Thus, in
spite of anticipated fiscal deficits in the next three years, general
government debt should fall to 29% of GDP in 2008 from about 31% of GDP
in 2006. Although small current account deficits could reappear when the
government ramps up public capital spending, Thailand's foreign
reserves--likely to reach US$64 billion by the end of 2006--and low
existing public external debt will continue to offer Thailand
significant flexibility in external financing.
The stable outlook on the credit ratings on Thailand is based on
Standard & Poor's expectation of a return to political normalcy and
stability by the end of 2007, which would most likely be achieved with
the election of a new government. This is critical for the long-term
social stability that is needed to create an environment conducive for a
revival in corporate investment and stronger economic growth. A positive
revision in the outlook or credit ratings could arise if a new
government successfully implements decisive measures to deal with
structural impediments to higher economic growth. Conversely, if
widespread unrest breaks out during or after the political transition, a
negative change to the sovereign credit ratings on Thailand is likely.
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