Bangkok--Feb 8--Fitch Ratings
Fitch Ratings (Thailand) Limited has today affirmed the National fund rating of AJF Cash Management Fund (“AJFCASH”) at ‘AA(tha)’/‘V1(tha)’ following the recent senior management changes at Ayudhya JF Asset Management Limited (“AJF”).
In January 2006, AJF’s major shareholders, consisting of Bank of Ayudhya (“BAY”) and JPMorgan Asset Management (“JPMAM”), assigned Chatrapee Tantixalerm as the chairman of the executive committee and acting managing director of AJF and Prapas Tonpibulsak as the new chief investment officer. According to the new management team, there is also some turnover in fund managers, but these changes in personnel should not affect the company’s operations, the funds’ investment policies, the investment decision process and operational controls.
Fitch notes that although the senior management changes could be disruptive to operations and adversely impact investor confidence, AJFCASH has not experienced any abnormal redemption thus far. Instead, the asset under management of the fund increased from THB2.2 billion at the end of November 2005 to THB3.3bn at the end of January 2006. Moreover, given AJFCASH’s investment objectives, which are to provide a high level of liquidity, low risk portfolios and stable total returns, the fund is likely to withstand any potential redemption, and at the same time maintain its credit quality and its market risk profile within the current ratings. Fitch will closely monitor the fund and the new management team.
The fund’s policy is to invest at least 70% of its assets in short-term government bonds with the remaining assets in highly-rated corporate and financial institutions’ bonds. Asset allocations are geared toward short-term liquid bonds such as treasury bills and the Bank of Thailand’s short-term bonds given the likelihood of potentially large redemptions and subscriptions, reflecting the nature of the fund as a cash management tool. At end-January 2006, around 94% of the portfolio (excluding accounts receivable and accounts payable) was invested in ‘AAA(tha)’ fixed income securities, mainly government-related securities, with the remainder invested in securities rated ‘A+(tha)’ or above. The weighted average portfolio duration was around 0.2 years.
The asset manager, AJF, was founded in 1996 as a Thailand-based, joint-venture asset management company. AJF’s major shareholders comprise Thailand’s sixth-largest bank, BAY, and JPMAM, a leading global investment management company, each owning 38.3% of its stakes, with the remaining stakes owned by Ayudhya Securities (10.0%), Ayudhya Alliance C.P. Life (6.7%) and Ayudhya Insurance (6.7%).
Fitch’s fund credit ratings are assessments of the average credit quality associated with securities in the portfolio as a whole. National fund credit rating of ‘AA(tha)’ indicates very high credit quality standards relative to other funds in Thailand in terms of portfolio assets, diversification, investment management and operational capabilities. National fund volatility rating describes the relative sensitivity of a fund’s total return (including price) to changes in interest rates, credit spreads, portfolio liquidity and other market factors in the local market. Funds rated ‘V1(tha)’ are considered to have low market risk, relative to other funds in Thailand demonstrating relative stability in total returns over short to long-term holding periods. Fitch notes that Thailand’s fixed income funds generally have short durations and therefore narrowed volatility definitions are required to provide greater differential between rated funds.
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 Long-term National 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.
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