S&P holds Thailand ratings as new King named

SINGAPORE - S&P Global Ratings today 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. The outlook is stable.

The ratings agency 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 on Thailand is the strong external balance sheet with ample external liquidity. 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-2016.

“On a narrow net external debt basis, we forecast Thailand to be in a net creditor position of about 27% of current account receipts in 2016.”

S&P said fears that the passing of King Bhumibol Adulyadej would result in social instability have receded with Crown Prince Maha Vajiralongkorn formally named King in December.

“Although some observers point to the possibility of the monarchy gradually losing its institutional prestige, we do not view the potential erosion, on its own, as having a material impact on the sovereign ratings,” S&P said.

“In Thailand's constitutional monarchy, the King has little direct role in the setting of policies and the day-to-day running of the Government.

“The seemingly irreconcilable class and regional divide in Thai politics is the key uncertainty affecting sovereign credit quality.

“Thailand's political landscape has been in flux after a military coup deposed the elected Government of Thaksin Shinawatra in September 2006. Since then, there have been frequent - and at times extra-constitutional -changes in the Government.

The last military coup in May 2014 restored order on the streets of Bangkok, but appears to have done little to mend the underlying social and political fissures.” www.standardandpoors.com (ATI).