JCR Assigns Thai Union an A- Credit Rating
The Japan Credit Rating Agency, Ltd. (JCR) has assigned the Thai Union Group PCL (Thai Union), one of the world’s leading seafood companies, an A- rating with a stable outlook, driven by the company’s global diversification and earnings stability. This foreign currency long-term issuer credit rating is the same as Thailand’s sovereign credit rating.
JCR said the A- rating reflected the strength of Thai Union’s business structure, with operations spread across Thailand, the U.S. and Europe as a result of the company’s acquisitions of long established and leading overseas brands. It added that Thai Union has also been successful in reducing production costs by leveraging economies of scale, investing in automation and putting focus on sustainability.
“I’m incredibly proud that Thai Union has received the same credit rating as Thailand’s sovereign rating,” said Thiraphong Chansiri, CEO at Thai Union Group. “This demonstrates the confidence the Japan Credit Rating Agency has in our company and our ability to manage the continued growth of the business despite the current challenging environment, while also continuing to deliver solid returns for investors and shareholders. We are a global company, and we will continue to focus on delivering healthy and nutritious products to consumers around the world.”
Thai Union’s global footprint has allowed it to deliver ongoing sales growth. The U.S. is Thai Union’s largest market and represented 44 percent of total sales in the first half of this year (2021), followed by Europe at 29 percent, the Thai domestic market at 11 percent, and other markets at 16 percent.
Ludovic Garnier, Thai Union’s Group CFO, noted that financial discipline was one of the keys to the Thai Union business. “In past years, we have been focusing on profitability, operating performance and how to diversify our source of financing. We have a solid financial plan to significantly improve the financial profile of the company, including looking at Net Debt/EBITDA and Net Debt/Equity ratios. I am very pleased with the JCR announcement as this will help Thai Union attract an even larger pool of investors.”
Earlier this year, Thai Union issued its first Sustainability-Linked Syndicated Loan (SLL) in both Thailand and Japan, a credit facility equivalent to THB 12 billion, with a five-year term. The SLL was oversubscribed by a factor of more than two times the initial facility size when first launched to the market. The loan is a significant step forward for Blue Finance—financing related to projects that benefit the planet’s oceans.
Last month, to strengthen its Blue Finance strategy, Thai Union successfully priced a THB 5 billion seven-year senior, unsecured Sustainability-Linked Bond (SLB) for institutional investors. This is the first ever SLB in Thailand. The SLB carries an interest rate of 2.47 % a year. “This SLB garnered demand of approximately THB 8.9 billion, or more than 2.23 times the initial offered amount, reflecting great trust in Thai Union’s solidity and our leadership position in the Blue Economy. In response to such strong demand, we decided to increase our issue size from THB 4 billion to THB 5 billion,” Chansiri said. “We’re bringing innovation to Blue Financing, too. Thai Union’s SLB is the first globally to introduce step-up / step-down facilities related to the achievement of Sustainability Performance Targets (SPTs). This means that the interest rate we pay is adjusted up or down based on whether we achieve our agreed targets,” he concluded.