Bangkok--17 Dec--Fitch Ratings
Fitch Ratings (Thailand) Limited has today affirmed the National fund ratings of TMB Treasury Money Fund, managed by TMB Asset Management Limited (TMBAM), at 'AAA(tha)'/'V1+(tha)'. The ratings reflect the fund's highest standards for credit quality, its conservative investment policies and the safety of the principal relative to other bond funds in Thailand in terms of portfolio assets, diversification, investment management and operational capabilities.
The objective of TMB Treasury Money Fund is to provide stable returns consistent with the preservation of capital and maintain a high level of liquidity by investing exclusively in high-quality money market instruments. The fund's investment policy is to maintain at least 85% of its net asset value (NAV) in treasury bills, government bonds, Bank of Thailand (BoT) bonds and other debt instruments guaranteed by the government or the BoT. The remainder is invested in bank deposits for liquidity support purposes. The fund maintains a weighted average maturity (WAM) at a maximum of 60 days, and only invests in instruments that have a maximum remaining maturity of 92 days.
Since Fitch started rating this fund in November 2005, more than 90% of the fund's total NAV has been invested in 'AAA(tha)'-rated assets, the remainder being in assets rated 'A(tha)' or 'F1(tha)' and above. Portfolio WAM was maintained within the range of 40-45 days, until it was reduced to below 20 days from the middle of 2008, due mainly to the inverted yield curve on the short-end of the curve. As of 12 December 2008, the fund had THB26.5bn of assets under management. 94.8% of the portfolio was invested in BoT's short-term bonds, 1.4% in Thai Treasury bills, 5.1% in bank savings with counterparties rated 'A(tha)' or higher, and the remainder in other assets such as accrued interest, receivable and payable from sales and purchases of investment. The fund's WAM was 11.4 days, and the top 10 largest unit holders accounted for 18.6% of the fund's NAV.
Amid the current global financial crisis, TMBAM has tightened some of its investment practices, to monitor risks more closely; the Investment Committee has met more often, than its normal schedule, to keep up with new developments in the market. Issues on credit risks have been more intensely focused on to minimise the likelihood of loss on the funds' NAV. For corporate entities, the outlook on each industry sector has been assessed more carefully, before incorporating the credit assessment of each corporate entity. For banks, there are more restrictions on investments in foreign banks' papers or papers issued by local branches of foreign banks.
TMB Asset Management Limited was founded in October 1996 as a local asset management company. TMB Bank is the largest shareholder of the company, holding 75% of total shares. In December 2008, asset under management (AuM) of the company was THB123.6bn. Fixed income funds have remained the majority of the company's portfolio, accounted for 78.8% of its total AuM.
Fitch's benchmark guidelines for 'AAA(tha)' and 'AA(tha)'-rated money market funds require that the portfolios not 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.
TISCO Asset Management Company Limited and Kasikorn Asset Management Company Limited each hold 10% of 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.
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.
Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215, Email: [email protected].
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 andother relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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