Bangkok--9 Oct--Fitch Ratings
Fitch Ratings has assigned Thailand-based Capital Nomura Securities Public Company Limited’s (CNS) National Long-Term Rating at ‘AA-(tha)’, with a Stable Outlook. The National Short-Term Rating is assigned at ‘F1+(tha)’.
KEY RATING DRIVERS
CNS’s National Ratings reflect Fitch’s expectation of a high probability of institutional support from the Nomura group of Japan. Nomura Securities Company Limited is rated ‘A-’/Stable/‘bbb+’, while Nomura Holdings is rated ‘A-’/Stable/‘bbb’.
Fitch deems CNS to be a strategically important subsidiary of the Nomura group. The Nomura group in June 2014 completed a tender offer that increased its stake in CNS to 85.8% from 38.6%. Even before the tender offer, there had been a track record of financial support and management integration between CNS and the group, and we expect these ties to increase in the future.
CNS provides a broad range of securities-related services, including securities brokerage, equity and debt underwriting, financial advisory and derivatives brokerage. It had a share of around 2.9% of the Thai securities brokerage market by total trading value in the first nine months of 2014. CNS’s revenues are primarily based on brokerage fees and income from margin lending, which are dependent on stock market conditions, which may be volatile. Nevertheless, the company has generally had a satisfactory earnings performance.
The Outlook is Stable, as Fitch does not expect any material change to the group’s propensity to support CNS in the near future.
RATING SENSITIVITIES
As the ratings reflect institutional support, they could be impacted by any changes in the stand-alone credit profile of the Nomura group.
Any changes in the Nomura group’s propensity to support CNS could also lead to ratings action. For example, an increase in the contribution of CNS to the group that makes it a core subsidiary could lead to an upgrade in CNS’s National Ratings. Meanwhile, any signs of a reduced importance of CNS to the group, such as via a reduction in the group’s shareholding or a reversal of integration measures, could lead to a downgrade. However, Fitch does not expect such changes to occur in the short to medium term.