Bangkok--27 May--Fitch Ratings
Fitch Ratings has today commented that the recent political turmoil will likely impact the performance of credit card and auto hire purchase asset-backed securities (ABS) due to business interruption and loss of employment for certain groups of obligors. Being the epicenter of the recent political unrest, obligors in Bangkok area are expected to be the most affected, while some business interruption and loss of employment are also expected in the provinces, although the extent should be less severe.
Despite the improvement in the delinquency rate of the credit card ABS transactions originated by Aeon Thana Sinsap (Thailand) Plc (AEONTS) since Q409, thanks to the economic recovery, delinquency rate is expected to increase over the next one to two quarters partly given their exposure to obligors in the Bangkok area. For auto hire purchase transactions, Fitch expects the impact from the political unrest to be less severe given the high seasoning of portfolios and the transactions’ limited exposure to obligors originated in Bangkok area. However, the delinquency rate of two auto hire purchase transactions originated by Siam Industrial Credit Plc (SICCO) remains high despite the economic recovery since Q409, partly due to the exposure to the truck sector. At present, Fitch expects the level of credit enhancements for credit cards and auto hire purchase ABS transactions to be sufficient to withstand some deterioration in the portfolios’ performance, although a junior tranche (rated ‘A(tha)’) of a credit card transaction and one auto hire purchase transaction originated by SICCO, both are on Negative Outlook, will have a lower tolerance to weakening portfolio performance. Fitch will continue to closely monitor the consequence of the recent political turmoil on the performance of the transactions.
Fitch does not expect any rating impact on an asset-backed commercial paper (ABCP, backed by residential hire purchase portfolio) and a commercial mortgage-backed securities (CMBS, backed by a long-term lease of government centre project) transaction, due to the link between the transactions’ ratings and the creditworthiness of National Housing Authority - the originator for ABCP, and the Treasury Department - the single tenant for CMBS.
As of May 26, 2010, Fitch maintains 17 outstanding national ratings on structured finance transactions in Thailand, including auto hire-purchase ABS, credit card ABS, CMBS and ABCP The ratings ranging from ‘AAA(tha)’ to ‘A(tha)’. During 2009, all ratings were affirmed with two issues on Negative Outlook. Fitch has recently assigned an International Local Currency Issuer Default Rating of ‘A-’/Negative to a credit card transaction originated by AEONTS in Thailand.
Applicable criteria available on Fitch’s website at www.fitchratings.com: “Global Structured Finance Rating Criteria,” dated September 30, 2009, “Criteria for Structured Finance Loss Severity Ratings”, dated February 17, 2009, “Counterparty Criteria for Structured Finance Transactions”, dated 22 October 2009, “Criteria to Analyse Legal Uncertainty in Emerging Market Securitisations”, dated 10 July 2009, and “Criteria for Existing Asset Securitisation in Emerging Markets — Sovereign Constraints”, dated 17 March 2008.
Contacts: Orawan Karoonkornsakul, Pramook Malasitt, Vincent Milton, Bangkok, +662 655 4755
Additional information is available at www.fitchratings.com.