Moody's Investors Service plans to review its credit rating for Thailand at the end of the year after giving the country a negative outlook for two years, while TRIS Rating warns that the thirdgeneration (3G) wireless broadband network and expected property bubble are possible areas of concern.
Aninda Mitra, vice president of Moody's Investors Service in Singapore, said yesterday that Thailand was given the negative ratings outlook when the yellowshirt protesters occupied Suvarnabhumi Airport in 2009. However, Moody's plans to upgrade the creditrating outlook on Thailand as the negative outlook should no longer be maintained, he said.
Moody's cannot schedule the outlook adjustment, nor predict which way the rate will go, because it has to consider many factors, he said.
Despite the quick improvement in the economic and financial picture, the political situation here has not shown progress yet, he said. If the political conflicts cannot be resolved, this might be a risk factor for creditrating adjustment as in the past.
TRIS Rating expressed concern that the telecom industry still has possible risk, as CAT Telecom's labour union plans to ask the Central Administrative Court for an injunction against the National Telecommunications Commission's auction of 3G2.1gigahertz spectrum licences on September 20, citing that the licensing could hit CAT's concession revenue. If the court accepts the case, this might delay the auction plan.
Santi Kiranand, president of TRIS Rating, said that if the auction were postponed, it would drag down foreign investor confidence as Map Ta Phut did. However, the three major telecom operators - AIS, DTAC and True - might not suffer because they would not need to put in additional money and they still have their cellular concessions and strong financial fundamentals.
Even though the financial status of property firms has strengthened from 2005 to the present, many investors still worry about the property market overheating, he said.
As of August 25, 33 firms have been given ratings of A, A, BBB or BBB, compared with their BBB and BBB+ ratings in 2005, Santi said. The market capitalisation of the 33 firms is Bt255 billion, or 3 per cent of the market cap of the Stock Exchange of Thailand.
There has been huge investment in real estate, especially condominium projects, he said. About 3040 per cent of the condo portfolio is speculative, which is not high and poses no risk, but investors should use caution, he said.
"The realestate industry has no signs of a bubble yet but if there is overspeculation, this might bring a bubble. It is a time of warning to prevent a risky property bubble," he said.
Under TRIS's bank stress test, if a property bubble bursts, nonperforming loans would soar to 20 per cent from 7 per cent of the total banking system. Mortgages account for 30 per cent of banks' total portfolio. Yet even with the damage, the financial status of commercial banks would remain acceptable, he added.