Bangkok--20 Jul--Fitch Ratings
Fitch Ratings (Thailand) Limited has today revised the National fund ratings of two money market funds in Thailand, TMB Treasury Money Fund (TMBTM) and TMB Money Fund (TMBMF), to 'AAAmmf(tha)' from 'AAA(tha)'/'V1+(tha)', following the implementation of the agency's new money market funds rating criteria and rating scale in Thailand. For further information, please see the 5 October 2009 criteria report, entitled 'Global Money Market Fund Rating Criteria', and the 15 March 2010 criteria report, entitled 'National Scale Money Market Fund Rating Criteria', which are available at www.fitchratings.com.
The 'AAAmmf(tha)' category represents Fitch's highest rating under its new rating scale for money market funds in Thailand. Fitch defines a 'AAAmmf(tha)' money market fund rating as having an extremely strong capacity to achieve its investment objective of preserving principal and providing shareholder liquidity through limiting credit, market, and liquidity risk, relative to all other short-term investments in Thailand.
"The ratings of TMBTM and TMBMF are based on the funds' credit quality, diversification and liquidity of the funds' assets. The credit quality of TMBTM's and TMBMF's portfolios is strong, with the majority of their assets invested in securities issued by the Ministry of Finance (MoF) and the Bank of Thailand (BoT)," said Orawan Karoonkornsakul, Fitch's Senior Director of Structured Finance and Funds in Thailand. As of 9 July 2010, TMBTM and TMBMF had approximately THB28.2bn and THB25.9bn in net asset value (NAV) with 'AAA(tha)'-rated securities accounting for 99.0% and 63.6% of the respective portfolios.
The market risk of the funds is low given their high proportion of investments in short-term liquid assets. TMBTM's and TMBMF's investment guidelines control the funds' weighted average maturity to reset date (WAMr) to remain within 60 days. As of 9 July 2010, the WAMr of TMBTM's and TMBMF's portfolios was 48.2 days and 38.1 days, respectively. The level of both funds' liquidity has been comfortably in line with Fitch's new money market fund rating criteria for 'AAAmmf(tha)' rated funds.
The objectives of both funds are to provide stable returns consistent with the preservation of capital and maintain a high level of liquidity. Under their investment guidelines, TMBTM has to maintain at least 85% of its NAV in government and BoT securities with no investments in corporate securities, while TMBMF has to invest at least 20% of its NAV in government and BoT securities with the maximum investment limit of 15% in corporate securities. Both funds have to invest only in securities with at least a Fitch Short-term rating of 'F1(tha)' or its equivalent - with a minimum of 50% of NAV invested in securities rated 'F1+(tha)' or its equivalent. In terms of asset diversification, TMBTM has been in full compliance with Fitch's investment guidelines of 'AAAmmf(tha)' rated funds over the past year. While there were certain periods in which TMBMF's holdings were not consistent with Fitch's asset diversification guidelines (such as breaches in issue limit), those inconsistencies were temporary and could be explained mainly by the fall in the fund's NAV.
TMBTM and TMBMF are managed by TMB Asset Management Company Limited (TMBAM), which has been operating a mutual fund business since 1996. The major shareholder is TMB Bank ('A+(tha)'/Outlook Stable/'F1(tha)'), Thailand's sixth-largest commercial bank, with a 75% stake. As of 9 July 2010, TMBAM was ranked sixth in the mutual fund business with 94 funds representing THB128.7bn worth of assets under management. Fitch notes that TMBAM has adequate compliance, monitoring, investment decision-making processes and fund support in place to ensure consistent performance in required investment practices.
Applicable criteria, "Global Money Market Fund Rating Criteria", dated 5 October 2009, and "National Scale Money Market Fund Rating Criteria", dated 15 March 2010, are available on Fitch's website at www.fitchratings.com.
Contacts: Orawan Karoonkornsakul, Lertchai Kochareonrattanakul, Vincent Milton, Bangkok, +662 655 4755.
Note to Editors: Fitch's National money market fund ratings are assigned on a scale of 'AAAmmf(tha)' to 'Bmmf(tha)'. The ratings assigned to the funds are National ratings, and as such, they provide a relative measure of capital preservation and liquidity 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.
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Additional information is available at www.fitchratings.com
Related Research:
Global Money Market Fund Rating Criteria
National Scale Money Market Fund Rating Criteria