Bangkok--12 May--Fitch Ratings
Fitch Ratings (Thailand) Limited has affirmed Central American Bank for Economic Integration’s (CABEI) National Long-term rating of its Thai baht senior unsecured bonds as follows:
Senior unsecured bonds of THB2.374bn due 2017 at ‘AAA(tha)’;
Senior unsecured bonds of THB1bn due 2014 at ‘AAA(tha)’;
Senior unsecured bonds of THB0.865bn due 2016 at ‘AAA(tha)’; and
Senior unsecured bonds of THB1.235bn due 2021 ‘AAA(tha)’.
This follows the agency’s affirmation on 26 April 2011 of CABEI’s Long-term Issuer Default Rating (IDR) at ‘A-’ with Stable Outlook and its Short-term IDR at ‘F2’.
The ‘AAA(tha)’ issue rating is the highest on Thailand’s national rating scale, based on the fact that CABEI’s Long-term foreign currency (FC) Issuer Default Rating (IDR) and Thailand’s Long-term local currency (LC) IDR are both at ‘A-’. Fitch notes that any rating divergence between CABEI and Thailand could affect CABEI’s issue rating. Specifically, CABEI’s ‘AAA(tha)’ issue rating may be downgraded if it is assessed to have a weaker credit profile than Thailand. However, Fitch believes the near-term prospect of this is remote given that the Outlook on Thailand’s ‘A-’ LC IDR is Negative and the Outlook on CABEI’s FC IDR is Stable.
CABEI's ratings could benefit from further loan diversification or greater enhancement of its capital base. Downward pressures could arise from an unexpected decrease in capital ratios or if a member country comes under stress, negatively affecting the benefits of CABEI’s preferred creditor status.
The ratings are supported by CABEI’s preferred creditor status and privileges conferred on it by member countries and its solid fundamentals, including adequate capitalization and asset quality as well as an established record of self-sustained profitability. Significant loan concentration, the volatile economic environment in some of the countries in which the institution operates and the member countries' creditworthiness relative to higher-rated multilateral development banks (MDB) limit CABEI's ratings. The ratings also factor in still weak private sector asset quality, although private sector exposure has markedly declined and Fitch expects near-term improvements in asset quality.
CABEI is a Central American MDB based in Tegucigalpa, Honduras. It is not subject to local regulation or taxation. It is currently 59%-owned by its five founding member states - Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. The remaining shares belong to other non-regional members: Argentina, Colombia, Mexico, Taiwan, Spain, Dominican Republic and Panama. CABEI's objective is to fund development projects in Central America by channeling medium- and long-term foreign currency resources both to public and private institutions.
Contacts:
Primary Analysts
Patchara Sarayudh (National Ratings)
Associate Director
+66 2655 4761
Fitch Ratings (Thailand) Limited
Wave Place 13th Fl., Wireless Road, Lumpini, Patumwan,
Bangkok 10330, Thailand
Theresa A Paiz-Fredel (International Ratings)
Senior Director
+1 212 908 0534
Fitch, Inc.
One State Street Plaza
New York, NY 10004
Secondary Analysts
Narumol Charnchanavivat (National Ratings)
Director
+66 2655 4763
Rene Medrano (International Ratings)
Senior Director
+503 2516 6610
Committee Chairperson
Jonathan Cornish
Managing Director
+852 2263 9901
Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable.
Additional information is available at www.fitchratings.com.
Applicable criteria, “Global Financial Institutions Rating Criteria”, dated 16 August 2010, “Rating Multilateral Development Banks and Other Supranationals”, dated 18 March 2010, and “National Rating Criteria” dated 19 January 2011, are available at www.fitchratings.com.
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