S&P affirms ratings on Thailand at 'BBB+/A-2' and 'A-/A-2'; Outlook stable

SINGAPORE - Standard & Poor's has affirmed its 'BBB+' long-term and 'A-2' short-term foreign currency sovereign credit ratings, and its 'A-' long-term and 'A-2' short-term local currency ratings on Thailand, with the outlook on long-term ratings stable. S&P also affirmed its 'axAA/axA-1' long- and short-term ASEAN regional scale ratings on Thailand. Its transfer and convertibility (T&C) assessment remains 'A'.

S&P said Thailand's strong external balance sheet and liquidity, a modest level of Government debt, and a history of effective monetary and fiscal policies support the rating. These strengths are weighed against the economy's relatively low-income level and Thailand’s continued political uncertainty.

“Anchoring the rating is Thailand's strong external balance sheet with ample external liquidity,” S&P said.

“Strong current account performances and a steady flow of inbound foreign direct investments have created a reserve buffer of an estimated seven months of current account payments as of end-2015. On a narrow net external debt basis, we forecast Thailand to be in a net creditor position of about 17% of current account receipts in 2016.

“We expect Thailand's external liquidity indicators to remain strong. Gross external financing needs are likely to stay around 74% of current account receipts plus usable reserves over 2015-2017.

“The export sector had suffered in the past three years from negative terms of trade while undergoing structural adjustments to its manufactured goods profile. Of late, however, the sector has begun to benefit from low oil prices and a weaker exchange rate; we forecast the current account to rebound to surplus levels averaging just over 5% of GDP over 2015-2017.” www.standardandpoors.com (ATI).