Bangkok--Nov 28--Fitch Ratings (Thailand)
Fitch Ratings (Thailand) Limited has today assigned a National fund rating of ‘AAA(tha)’/‘V1+(tha)’ to TMB Treasury Money Fund (“TMBTM”). The rating reflects the fund’s highest standards for credit quality, conservative investment policies and the safety of principle relative to other bond funds in Thailand in terms of portfolio assets, diversification, investment management and operational capabilities. Portfolio monitoring reports are submitted to Fitch weekly.
TMBTM seeks to provide stable returns consistent with the preservation of capital and maintenance of high liquidity, by investing exclusively in high-quality money market instruments. The fund’s policy is to invest at least 85% of its assets in short-term government securities and the remainder in bank deposits, mainly in savings accounts. The fund maintains a weighted average maturity (“WAM”) of a maximum of 60 days and only invests in instruments that have a maximum remaining maturity of 92 days.
As at 18 November 2005, the fund’s WAM was 45 days. During that time, TMBTM had assets under management totaling THB3.3 billion; 77.0% of the portfolio was invested in Thai Treasury bills, 17.8% in Bank of Thailand’s short-term bonds, 4.6% in bank savings with counterparties rated ‘A(tha)’ or higher, and the remainder in other assets.
Fitch notes that although the investor concentration - as a result of top five investors owning around 30% of the fund - poses moderate risk, this should be mitigated by the fund’s high liquidity which is driven by the management’s commitment to its stated investment objectives, and its close and active communication with large investors to better forecast cash outflows and redemption requirements. Fitch also notes that adequate compliance and monitoring procedures as well as a prudent investment decision-making process are in place to ensure the fund satisfies required investment practices.
The asset manager, TMB Asset Management Limited (“TMBAM”), founded in October 1996, is a local asset management company, ranked fourth in the mutual fund business in terms of assets under management, and ranked third in the bond fund segment as of September 2005. The major shareholder is Thai Military Bank (“TMB”), Thailand’s fifth-largest bank, holding 51%. At end-September 2005, TMBAM had THB66.6bn of assets under management, 61% of which were fixed income funds (bond and money market funds).
Fitch’s benchmark guidelines for ‘AAA(tha)’ and ‘AA(tha)’ rated money market funds require that the portfolios cannot hold any securities below “Tier 1”. Tier 1 securities consist of those rated ‘A(tha)’ or ‘F1(tha)’ and above, or those having ratings equivalent to Fitch’s rating of ‘A(tha)’ or ‘F1(tha)’ and above. The ‘V1+(tha)’ rating is assigned only to money market funds that should not experience loss of principal value even in adverse interest rate environments.
Note to Editors: Fitch’s National fund credit ratings are assigned on a scale of ‘AAA(tha)’ to ‘D(tha)’, on a rating scale similar to that of Fitch’s National Long-term credit ratings. Meanwhile, the volatility ratings are assigned on a scale of ‘V1+(tha)’ (least volatile) through ‘V10(tha)’ (most volatile). The ratings assigned to the fund are National ratings, and as such, they provide a relative measure of creditworthiness and total return stability only in comparison with other funds in Thailand. They are therefore not internationally comparable.
Disclosure: TISCO Asset Management Company Limited and Kasikorn Asset Management Company Limited each hold 10% of the shares in Fitch Ratings (Thailand) Limited. No shareholder, other than Fitch Ratings Limited of the UK, is involved in the day-to-day operation of, or credit rating reviews undertaken by, Fitch Ratings (Thailand) Limited.
Fitch’s rating definitions and the terms of use of such ratings are available on the agency’s public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch’s code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the ‘Code of Conduct’ section of this site.
For more information please contact:
Lertchai Korcharoenrattanakul, +662 655 4760;
Pimolpa Simaroj, +662 655 4761; Vincent Milton, +662 655 4759 End.