Bangkok--27 Aug--Fitch Ratings
Fitch Ratings (Thailand) Limited has today affirmed the ratings of the Class A-2 debentures and upgraded the ratings of the Class B debentures issued by Eternal 3 Special Purpose Vehicle Company Limited (Eternal 3) and Eternal 4 Special Purpose Vehicle Company Limited (Eternal 4). The agency has also revised the Outlook of Eternal 3’s Class C debentures to Stable from Negative. The transactions are securitisations of credit card receivables ABS originated by Aeon Thana Sinsap (Thailand) Public Company Limited (AEONTS; ‘BBB+(tha)’/Stable/‘F2(tha)’). The rating actions are as listed below:
Eternal 3:
THB500m Class A-2 (due March 2013) affirmed at ‘AAA(tha)’; Outlook Stable; Loss Severity Rating 'LS-2';
THB120m Class B (due March 2013) upgraded to ‘AAA(tha)’ from ‘AA(tha)’; Outlook Stable; Loss Severity Rating 'LS-3'; and THB160m Class C (due March 2013) affirmed at ‘A(tha)’; Outlook revised to Stable from Negative; Loss Severity Rating 'LS-3'.
Eternal 4:
THB500m Class A-2 (due October 2014) affirmed at ‘AAA(tha)’; Outlook Stable; Loss Severity Rating revised to ‘LS-3’ from ‘LS-2’; and THB205m Class B (due October 2014) upgraded to ‘AAA(tha)’ from ‘AA(tha)’; Outlook Stable; Loss Severity Rating revised to ‘LS-3’ from ‘LS-4’.
The rating affirmations of the Class A-2 debentures for both transactions reflect their very strong credit enhancement (CE) levels, the portfolios’ satisfactory historical performance compared to Fitch’s base case assumptions at closing, and Thailand’s improving economic conditions.
The rating upgrades of the Class B debentures are based on an increase in CE levels, which Fitch believes will allow the debentures to withstand a ‘AAA(tha)’ stress. The more favourable economic conditions and the recent improvement in Eternal 3’s portfolio performance provide support for the Outlook revision to Stable for its Class C debentures.
“The performances of Eternal 3’s and Eternal 4’s portfolios have improved since late 2009, thanks mainly to improved domestic economic conditions. The impact from political unrest in May 2010 has been limited on the portfolios’ performances. In projecting the future performance of both transactions, Fitch now uses the portfolios’ historical worst performance as a benchmark, which Fitch views is sufficiently conservative,” says Orawan Karoonkornsakul, Senior Director in Fitch Thailand’s Structured Finance team.
While prolonged political uncertainty remains a concern, the recent performances of Eternal 3’s and Eternal 4’s portfolios appear to be relatively resilient to this risk. During the first seven months of 2010, the average yield and excess spread as well as monthly payment rate of both transactions were higher than the average of 2009, while the average default rates in 2010 declined from the 2009 level.
Contacts:
Lead Surveillance Analyst
Orawan Karoonkornsakul
Senior Director
+662 655 4766
Fitch Ratings (Thailand) Limited
Wave Place 13th floor, 55 Wireless Road
Bangkok 10330, Thailand
Committee Chairperson
Alison Ho
Senior Director
+852 2263 9937