Bangkok--14 May--Fitch Ratings (Thailand)
Fitch Ratings (Thailand) Limited has today assigned National fund ratings of 'AAA(tha)/V1+(tha)' to TMB Money Fund (TMBMF). The ratings reflect the fund's highest standards for credit quality, conservative investment policies and the safety of principal relative to other bond funds in Thailand. In assigning the ratings, Fitch has given consideration to the fund's investment policies, management capability and commitment, risk management procedures and supporting controls in ensuring consistency with management's stated objectives. Portfolio monitoring reports are submitted to Fitch weekly.
The investment objectives of the fund are to provide investments with a stable return, preservation of capital and the maintenance of high liquidity. Under the fund's new investment guidelines that have been adopted since early 2007, the fund has to invest at least 20% of its net asset value (NAV) in government or central bank securities, or those guaranteed by the government; also, at least 55% of the fund's NAV has to be invested in banks, while limiting investment in securities issued by corporate entities to 15% of the fund's NAV. Maximum maturity of tradable securities held by the fund is 92 days, with the exception of up to 5% of the fund's NAV in time deposits maturing within 365 days. The fund has to manage its weighted average maturity within 60 days, while at least 5% cash is required as liquidity reserve of the fund.
To maintain the highest level of credit quality, the fund has to invest exclusively in securities with Fitch's, or equivalent, Short-term rating of 'F1(tha)' or Long-term rating of 'A(tha)', and above (Tier-1 Securities). In addition, at least 50% of the fund's NAV must be invested in securities with Fitch's Short-term rating of 'F1+(tha)' or equivalent, and investments in time deposits of 'F1(tha)'-rated banks must not exceed 5% of the fund's NAV.
Investors should note that the portfolio composition has been adjusted since early 2007 to comply with its new investment guidelines. At the end of April 2007, the portfolio was largely in line with the new investment guidelines, except that around 2% of the fund's NAV was investments in promissory notes (P/N) and time deposits of a 'F2(tha)'-rated bank. Because these securities are not transferable or tradable, the fund decided to keep them in the portfolio for the best interests of the unit holders until they mature in June 2007 and October 2007, respectively. Fitch will monitor the portfolio closely to ensure that the fund is fully in line with the investment guidelines by October 2007.
Besides maintaining 5% of cash as liquidity reserve, as well as a majority of liquid asset holdings, the fund has managed investor concentration to deal with redemption activity. The top 10 largest unit holders should hold no more than 15% of the fund's NAV. Risk from large redemption is further mitigated by the asset manager's close and active communication with large investors to better forecast cash outflows and redemption requirement. Fitch also notes that adequate compliance, monitoring and investment decision-making processes are in place to ensure consistent performance in required investment practices.
The asset manager, TMB Asset Management (TMBAM), was founded in October 1996 to operate a mutual fund business in Thailand. The major shareholder is Thai Military Bank, Thailand's fifth-largest bank, with a 56% stake. At the end of April 2007, TMBAM's asset under management (AUM) was more than THB100 billion, and it ranked the fifth in the mutual fund business and the fourth in the fixed income fund segment in terms of AUM.
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 by Fitch, or equivalent. 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.
Contacts: Napachak Phasukavanich, Lertchai Korcharoenrattanakul, Vincent Milton +662 655 4755.
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 a 10% stake 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.
Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6336 6801.
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