Bangkok--16 Oct--Fitch Ratings
Fitch Ratings-Bangkok/Singapore- 16 October 2009: Fitch Ratings has today affirmed AYF Cash Management Fund’s (AYFCASH or “the fund”) National Fund Credit Rating at ‘AAA(tha)’, and its National Fund Volatility Rating at ‘V1(tha)’.
The ratings affirmations reflect the credit quality and liquidity of the fund’s assets, as well as Ayudhya Fund Management Company Limited’s (AYF) capabilities in managing the fund. AYFCASH has been able to maintain portfolio quality consistent with its investment policies. The credit quality of the fund has been strong, with the majority of its assets invested in treasury bills and bonds issued by the Bank of Thailand. Meanwhile, the market risk of the fund has remained low due to its high proportion of investment in short-term liquid assets. At end-August 2009, 99.9% of the portfolio were in ‘AAA(tha)’-rated assets, and the portfolio’s weighted average maturity (WAM) was 26 days. The top-five largest unit holders accounted for approximately 11% of the fund’s net asset value (NAV). Fitch also notes that operational controls of AYF are adequate to fulfill the standards of investment practices.
AYFCASH is an open-ended, short-term fixed-income fund investing mainly in short-term government papers, bank deposits and highly-rated short-term fixed-income instruments. Under investment policies, the fund must invest at least 70% of its NAV in short-term government securities or in issues guaranteed by the government. The fund is allowed to invest in corporate issues or financial institution papers, with a maximum of 15% of the fund’s NAV for each type of security. In terms of credit quality, at least 85% of the fund’s NAVs must be invested in ‘AAA(tha)’-rated securities, and the remaining in securities with a minimum rating of ‘AA-(tha)’. The maturity of each security must not exceed six months (with an additional cushion of 10 business days), and the portfolio duration is targeted at not longer than 0.25 years.
AYF, a Thailand-based asset management company, is 76.6% owned by Bank of Ayudhya (‘AA-(tha)’/Stable Outlook/‘F1+(tha)’/). At end-August 2009, AYF had THB52.8bn in total asset under management (AuM), of which approximately 60% were mutual funds. With market share of 1.8%, AYF is ranked 12th in the mutual fund business with 40 funds under its management. Its recent acquisition of PrimaVest Asset Management Company Limited, which has AuM of THB13.5bn for mutual funds, will move up AYF’s market share ranking to number nine with 2.6% share.
The fund credit rating reflects the average credit quality of the fund’s overall portfolio and its investment policies. The volatility rating reflects the risk-adjusted duration of the fund’s investments, which incorporates interest rate, credit spread, liquidity, derivative and other applicable risk factors. Fitch notes that Thailand’s bond funds generally have short durations, and therefore volatility definitions have been adjusted to provide greater differential between rated funds.
A national fund credit rating of ‘AAA(tha)’ indicates that the fund has the highest credit quality standard for a bond fund in Thailand in terms of its portfolio assets, diversification, investment management and operational capabilities. Bond funds rated ‘V1(tha)’ are considered to have low market risk relative to other bond funds in Thailand, demonstrating relative stability in total returns over the short- to long-term holding periods.
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.
Copies of surveillance reports will be available on the agency’s website, www.fitchratings.com.
Contacts: Pramook Malasitt, Orawan Karoonkornsakul, Vincent Milton, Bangkok, +662 655 4755.