Bangkok--18 Jun--Fitch Ratings
Fitch Ratings (Thailand) has affirmed the National Long-Term Ratings on four Thai non-bank subsidiaries of foreign financial institutions as follows:
- Easy Buy Public Company Limited's (EB) at 'AA+(tha)'
- Maybank Kim Eng Securities (Thailand) Public Company Limited's (MBKET) at 'AA+(tha)'.
- Yuanta Securities (Thailand) Company Limited (YSTH) at 'AA(tha)'
- Capital Nomura Securities Public Company Limited (CNS) at 'AA(tha)'
The Outlooks on all four 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 four entities' ratings are driven by Fitch's expectations of institutional support from their parents, namely ACOM CO., LTD. (ACOM; A-/Stable), Malayan Banking Berhad (Maybank; A-/Stable), Yuanta Financial Holdings Co., Ltd. (YFHC; BBB+/Stable) and Nomura Holdings, Inc. (NH; A-/Stable, Viability Rating: bbb+). This view reflects the companies' strategic importance to their parents as indicated by the parents' significant ownership, high levels of management control and integration, strong synergies with the parent groups, and historical evidence of support.
CNS's National Ratings are driven by NH's Viability Rating rather than the latter's Long-Term Issuer Default Rating (IDR). NH's IDR is driven by Fitch's expectation that, should it be required, it is highly likely to receive extraordinary support from the Japanese sovereign (A/Stable), although this support is unlikely to flow through to the Thai subsidiary.
Fitch has equalised the senior debt ratings of EB and YSTH 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.
SUBORDINATED DEBT
Fitch rates the subordinated debt of MBKET and YSTH one level below their National Long-Term Ratings as the debt carries higher loss-severity risks than senior unsecured instruments, which rank higher in the priority of claims. The notching also incorporates the subordinated notes' lack of going-concern loss-absorption and equity conversion.
RATING SENSITIVITIES
NATIONAL RATINGS AND SENIOR DEBT
Changes in the credit profiles of the respective parent firms may affect the National Ratings on MBKET, EB, YSTH and CNS.
Fitch may take rating action if the agency believes there are changes in the respective parents' propensity to provide extraordinary support to the Thai subsidiaries. For example, Fitch may upgrade the subsidiaries' ratings if these subsidiaries contribute more to the groups in a way that makes them core subsidiaries of their groups. The agency may take negative rating action if the parents significantly reduce their ownership or withhold financial commitments. However, Fitch does not expect such changes to occur in the medium term.
SUBORDINATED DEBT
Changes in National Long-Term Ratings on MBKET and YSTH would have a similar effect on the ratings of their subordinated notes.
The rating actions are as follows:
MBKET:
- National Long-Term Rating affirmed at 'AA+(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
- National Long-Term Rating on Thai baht-denominated subordinated debt affirmed at 'AA(tha)'
EB:
- National Long-Term Rating affirmed at 'AA+(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
- National Long-Term Rating on 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)'
- National Short-Term Rating on senior unsecured debt programme affirmed at 'F1+(tha)'
- National Long-Term Rating on Thai baht-denominated subordinated debt affirmed at 'AA-(tha)'
- National Long-Term Rating on US dollar-denominated subordinated debt affirmed at 'AA-(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 senior unsecured debt programme affirmed at 'F1+(tha)'