Bangkok--21 Sep--Fitch Ratings
Fitch Ratings-Bangkok-21 September 2017: Fitch Ratings (Thailand) has affirmed the National Long-Term Ratings on six Thai subsidiaries of North Asian financial institutions.
The following have been affirmed at 'AAA(tha)' with a Stable Outlook:
- Bank of China (Thai) Public Company Limited (BOCT),
- Industrial and Commercial Bank of China (Thai) Public Company Limited (ICBCT), and
- ICBC (Thai) Leasing Company Limited (ICBCTL).
The agency has also affirmed Easy Buy Public Company Limited (EB) at 'AA+(tha)', Yuanta Securities (Thailand) Company Limited (YSTH) at 'AA(tha)' and Capital Nomura Securities Public Company Limited (CNS) at 'AA-(tha)'. The Outlooks on all three entities are Stable.
A full list of rating actions is included at the end of this commentary.
KEY RATING DRIVERS
NATIONAL RATINGS AND SENIOR DEBT
The National Ratings of all six entities reflect Fitch's view that these firms would benefit from their parents' extraordinary support if required - that is, from Bank of China (Hong Kong) Ltd. (BOCHK; A/Stable), Industrial and Commercial Bank of China Limited (ICBC; A/Stable), ACOM CO., LTD. (ACOM; A-/Stable), Yuanta Financial Holding Co., Ltd. (YFHC; BBB+/Stable) and Nomura Holdings, Inc. (NH; A-/Stable, Viability Rating (VR): bbb). Fitch deems the Thai subsidiaries strategically important to their respective parents, given the significant ownership, high levels of management control and integration, name- and brand-sharing, and historical evidence of support.
CNS's National Ratings are driven by NH's VR rather than by the latter's Long-Term Issuer Default Rating (IDR). Fitch does not factor in the extraordinary support of the Japanese sovereign (A/Stable), which in the agency's view is unlikely to flow through to the Thai subsidiary. Hence, CNS's rating is correlated with the parent's VR rather than the latter's IDR.
ICBCTL's National Ratings are equalised with those of ICBCT, reflecting Fitch's view that the former is a core subsidiary of the bank. ICBCTL operates ICBCT's hire purchase business, which is one of the bank's core businesses. The hire-purchase business accounted for 29% of ICBCT's consolidated loans at end-2016 and 34% of its consolidated revenue in 2016.
ICBCTL's and EB's senior debt ratings are equalised with the National Ratings of the entities, reflecting Fitch's approach for rating senior debt instruments.
Similarly, CNS's short-term debenture programme is rated at CNS's National Short-Term Rating, as issuances under the programme constitute the company's unsubordinated and unsecured obligations.
GUARANTEED BONDS
The ratings of ICBCTL's bonds are unconditionally and irrevocably guaranteed by ICBCT. ICBCTL's guaranteed bonds are rated at ICBCT's National Long-Term Rating of 'AAA(tha)'. The Stable Outlook on the guaranteed bonds is consistent with the guarantor's Outlook.
RATING SENSITIVITIES
NATIONAL RATINGS AND SENIOR DEBT
The National Ratings of BOCT, ICBCT and ICBCTL are already at the top end of the scale, meaning there is no rating upside. Fitch, however, may downgrade the ratings of these subsidiaries if the ratings of their respective parents are downgraded.
The National Ratings of EB, YSTH and CNS may be affected by changes in the credit profile of their respective parents.
The Thai subsidiaries' ratings may also be revised as a result of material changes in their parents' propensity to provide them with extraordinary support. This may occur if the parents significantly reduce their ownership or financial commitments, indicating a materially lower propensity to provide support, potentially leading to negative rating actions. However, Fitch sees no likelihood in the near term of the parents lowering their propensity for support.
GUARANTEED BONDS
The ratings of ICBCTL's guaranteed bonds are at the highest level on the Thai national scale, meaning there is no possible upgrade. ICBCTL's guaranteed bonds may be affected by negative rating actions on ICBCT.
The rating actions are as follows:
BOCT:
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
ICBCT:
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
ICBCTL:
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
- National Long-Term Rating on bonds guaranteed by ICBCT affirmed at 'AAA(tha)'; Outlook Stable
- National Long-Term Rating on senior unsecured bonds affirmed at 'AAA(tha)'
- National Short-Term Rating on unsecured unsubordinated debenture programme affirmed at 'F1+(tha)'
EB:
- National Long-Term Rating affirmed at 'AA+(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
- National Long-Term Rating of senior unsecured bonds affirmed at 'AA+(tha)'
YSTH:
- National Long-Term Rating affirmed at 'AA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
CNS:
- National Long-Term Rating affirmed at 'AA-(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
- National Short-Term Rating on unsecured unsubordinated debenture programme affirmed at 'F1+(tha)'