PTT Global Chemical Public Company Limited (GC), a leading petrochemical and chemical company in the PTT Group, is set to issue subordinated debentures with equity-like characteristics for the first time in a decade for the group, and the first time ever for GC. Fitch Ratings (Thailand) has assigned GC a credit rating of AA(tha) with a “stable” outlook, while the subordinated debentures are rated A+(tha). The proceeds from this issuance will be used to repay both baht and U.S. dollar debts, bolster GC’s capital structure, and support sustainable growth. On September 20, 2024, Fitch Ratings (Thailand) upgraded GC’s outlook from “negative” to “stable,” citing the company’s efforts to reduce its debt ratio through various financial measures.
Senior Executive Vice President of Finance and Accounting, Mr. Titipong Chulprasiridee, explained that the subordinated debentures, which feature equity-like attributes and can be redeemed early by the issuer, will be offered to the public. The aim is to support GC’s debt reduction plan and fortify its financial structure for future growth. The company believes these debentures will be a stable investment choice, offering attractive returns, especially for retail investors seeking PTT Group debentures—something the group hasn’t issued in over 10 years.
Additionally, Mr. Titipong Junlapornsiri, Executive Vice President of Finance and Accounting, noted that GC is implementing measures to reduce debt and boost profitability, ensuring sustainable growth amid the volatile petrochemical market. GC is currently executing the 3 Steps Plus strategy to enhance competitiveness and pursue growth aligned with changing industry dynamics. The strategy includes:
- Step Change – Strengthening competitiveness and consolidating GC’s position as the PTT Group’s petrochemical hub in Southeast Asia.
- Step Out – Expanding growth in specialty chemicals both domestically and internationally.
- Step Up – Fostering business sustainability under an Environmental-Social-Governance framework, with a goal to achieve net-zero greenhouse gas emissions.
GC’s business restructuring plan, which may involve non-cash asset impairment, aims to further solidify its long-term stability.
The debentures will help optimize GC’s capital structure to support future sustainable growth. The funds raised will be used to pay off existing loans, both local and international. From an accounting perspective, the subordinated debentures will be treated as 100% equity, similar to other equity-like instruments.
The company anticipates receiving 50% equity credit from leading credit rating agencies—Moody’s, S&P Global Ratings, and Fitch Ratings. The debenture structure differs from typical equity-like subordinated debentures in Thailand, especially regarding interest rate adjustments. For example, Moody’s considers debentures eligible for 50% equity credit only if the interest rate remains fixed for the first 10 years. Similarly, GC expects S&P to recognize 50% equity credit for the first 5 years and 6 months. After this period, the debentures will be classified as debt, aligning with GC’s right to redeem before maturity at 5 years and 6 months, thus managing the debt repayment profile.
GC is currently in the process of filing its prospectus with the Securities and Exchange Commission (SEC), with further details on the interest rate and subscription date to be announced in due course.
