Tuesday, February 16, 2010

MFC enters 35th year with “Customer Centric” strategy and 300-billion-baht NAV target

MFC celebrates its 35th anniversary with increased focus on “Customer Centric” strategy and a goal to become consumer’s name of choice through delivery of impressive fund performance and excellent services. To reinforce its status as the trusted financial brain for all groups of investors, MFC is poised to expand its customer base to the young generation and retirees and is fully ready to support government’s projects as professional advisors, in addition to a strong commitment in corporate social responsibility. The company expects its net asset value (NAV) to grow 27.79% from 234,742 million baht in 2009 to 300,000 million baht this year.


Dr. Pichit Akrathit, President of MFC Asset Management Plc. (MFC), announced as the company entered its 35th year of operation that, MFC would continue to focus on “Customer Centric” strategy this year to enhance customer’s wealthy and happy life. A continued series of market research studies will be conducted to obtain an insightful understanding of customer’s demands, based on which new funds and first-class services will be catered to ensure customer’s desirable return on investment and maximum satisfaction. These include professional services to be delivered by MFC’s fund managers and investment consultants, “MFC Smart Services” that provide online trading convenience through MFC Smart Track, MFC Smart Tele, and MFC Smart Trade, as well as marketing and promotional campaigns for all customer groups, such as mileage program.

Dr. Pichit reported that, as of the end of 2009, MFC’s total NAV stood at 234,742.28 million baht, an increase of 18,267.91 million baht or 8.44% above 216,474.37 million baht recorded at the end of December 2008. NAV of all mutual funds managed by MFC amounted to 150,423 million baht, rising 11.17% over 135,309 million baht posted a year earlier. In 2009, the company launched 32 new funds with a combined inception NAV of 13,547.12 million baht and paid out total dividends of 423.76 million baht to unitholders from 13 new funds.

MFC managed 44 provident funds with 546 companies and a combined NAV of 60,816.49 million baht at the end of 2009, which grew 8.74% or 4,886 million baht from 55,930 million baht in 2008. Services offered by MFC to the clients included online information of the fund’s investment portfolios, provision of investment training at client’s office, and special seminars. As for private funds, which included government pension funds that MFC managed for key accounts like Thai Red Cross Society, the NAV totaled 23,502 million baht in 2009.

MFC is blessed with the capability to provide full, professional support for government’s projects as financial advisor and manager of infrastructure funds and private equity funds. In 2009, the company served as the advisor in setting up Thailand Carbon Credit Fund and was advisor of the Public Debt Management Office in portfolio planning of funds for public debt restructuring and development of domestic fixed income securities market.

As for 2010, the company targets a 27.79% growth in NAV to 300,000 million baht and an increase in revenues to 700 million baht.

Dr. Supakorn Soontornkit, Senior Executive Vice President of MFC, added about activities held over the past year, saying that an emphasis was given to customer relations under MFC Fund Family program that spawned a continued series of lifestyle activities, such as cooking, painting, ballroom dancing, spa treatment, and movie screening, etc. Having received very positive feedback from customers, the company will this year carry on with this customer relations program on top of educational seminars held by the company on a regular basis. Another focus with be given to provision of first-class services to increase customer’s satisfaction and good impression of MFC’s services.

He elaborated that the year-round activities in celebration of MFC’s 35th anniversary would, as word of thanks, revolve around customer’s benefits to bring them happiness and wealth from good return on investment and highest satisfaction with the services offered. The company’s wealth management team will be further strengthened in areas of Wealth Committee, Wealth Services, and Wealth Analyzer Program to ensure that investment planning, consultancy, and tracking are up to the latest economic sentiment and investment conditions.

According to Dr. Supakorn, MFC plans to launch 30 new funds this year, divided into 12 fixed income funds, 1 equity fund, 5 flexible portfolio funds, 7 foreign investment funds, and 5 property funds. In terms of customer base, expansion will be focused on the young generation side by side with retirees. The company hopes to boost revenue from the new markets, both domestic and overseas, to 30% of total revenue.

In private equity funds, primary target areas for investment of MFC Energy Fund this year fall on biomass and solar sectors while fund will be mobilized for Thailand Creativity Fund and a study on renewable energy projects development will be conducted.

MFC was a SET Awards 2009 nominee in corporate social responsibility (CSR) category as a result of the company’s achievements in CSR last year. The company organized MFC Talent Award for sixth year in a row, implemented a project to upgrade library and donate learning equipment and materials to Ban Tha Chang School in Rayong with use of charitable allocation from fee revenue of MFC Islamic Fund and donation from the unitholders, and extended its support for academic excellence through “MFC Asset Management Professor of Finance and Banking” program. In 2010, MFC has planned a series of CSR activities throughout the year with adherence to the concept of “MFC… Building Thai Intelligence” to contribute to the betterment of education and knowledge in various disciplines and for the benefits of the Thai society at large.

Sunday, February 7, 2010

Moody's: Asian Structured Finance 2009 Review & 2010 Outlook

Despite challenges, cross-border issuance likely to revive as market improves in 2010


Moody's Investors Service says in a new report that issuance in the Asian structured finance market will rise moderately in 2010, as investor interest makes a comeback, and the price gap between investors and sponsors narrows.
"The performance outlook for Korean RMBS and auto loan ABS is stable.

Korean residential mortgage loans have a recovery rate of over 99%, while the performance of Korean auto loans has been stable, with no marked deterioration during the credit crisis," says Jerome Cheng, a Moody's Vice President and author of the report.

"The performance outlook for Korean credit card ABS and Singaporean CMBS is negative. The negative outlook on Korean credit card receivables is based on potential deterioration in cardholders' payment ability. Korean household debt is at an all-time high, and a rise in interest rates would
hurt cardholders' ability to pay down unsecured credit card receivables.

For commercial properties in Singapore, the oversupply of office and industrial space and a weak economy are adding pressure to both vacancy and rental rates," says Mr. Cheng.

However, Moody's sees no rating implications on the rated transactions due to asset performance. "Given the level of subordination and the structural mechanisms present, we do not expect any rating actions, even for the two asset classes on which we have a negative outlook," says Mr. Cheng.

In its outlook for activities in 2010, the rating agency says that Korea, the largest securitization market in this region, will issue some cross-border ABS, RMBS, and covered bond transactions. Investor interest is evident, given that Korean receivables did not deteriorate much during the crisis. Rather, they have all improved, as Korea's economy started to improve.

In its review of 2009, Moody's notes that the fallout from the credit crunch significantly impacted the issuance from the Asian structured finance market -- with the exceptions of the domestic markets in Korea and India.

Korea's domestic and cross-border issuance in 2009 was USD33.0 billion, 87.6% of the region's total USD37.7 billion issuance. Korea's domestic market was dominated by project finance securitizations and RMBS, while its cross-border market generated all the foreign currency-denominated issuance in the region, including Asia's first covered bond transaction.

Moody's rating actions in 2009 were mainly downgrades related to changes in counterparty ratings and the change in Korea's local currency bond ceiling. "The downgrades were not driven by pformance deterioration in the underlying receivables. If anything, the performance of these receivables is well within our expectations," explains Mr. Cheng.

Moody's also changed its assumptions for three transactions, as perceived levels of risk increased. Two of them are deferred payment transactions in Singapore where the underlying residential property buyers' default risk had increased and the property values had declined. The third one is a Real Estate Investment Trust (REIT) in Taiwan where the REIT had acquired a new property through increased leverage. The ratings of these three transactions were subsequently downgraded.

The report discusses Moody's expectations for the Asian structured inance market in 2010, examines the outlook for cross-border Korean RMBS and ABS and Singaporean CMBS, summarizes issuance activities in 2009, and discusses collateral performance and the rating downgrades in
2009.

The report, "Asian Structured Finance: 2009 Review and 2010 Outlook" can be accessed at www.moodys.com.

Friday, February 5, 2010

2010 U.S. Speculative-Grade Default Rate Expected At 5%; Bond-Market Revival Lowers Refinancing Risk, Article Says

Standard & Poor's updates its outlook for the issuer-based U.S. corporate speculative-grade default rate each quarter after analyzing the latest economic results and expectations. An article published today says that at the outset of 2010, financial conditions for leveraged issuers appear markedly better. The article, which is titled "U.S. Corporate Speculative-Grade Default Rate Projected At 5% In 2010 As An Eerie Calm Descends," says that liquidity concerns have eased, partly because of continued hefty support from the Fed and healthy investor demand and impressive activity in the financial markets, which have lowered refinancing risk. "For companies able to access the bond market to refinance upcoming loan or bond obligations, the current benevolent conditions are logically expected to lower corporate default risk in the near term," noted Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "For other corporate borrowers that remain disproportionately dependent on bank financing, the future is cloudier, given banks' continued predisposition to shrink loan books. Those with the greatest refinancing risk exposure are issuers with ultra-low ratings that are concentrated in property-related or consumer discretionary sectors."


Our year-end 2010 baseline projection for the U.S. corporate speculative-grade default rate is now 5.0%, with alternative scenarios of 6.9% at the pessimistic end and 4.3% at the optimistic. The baseline is lower than the 6.9% projection we forecasted for the third quarter of 2010.

"This does not mean that corporate default risks are permanently lower," Ms. Vazza cautioned. "The ranks of surviving low-rated companies remain large by historical standards." The extent of decline in risk premiums for lower-rated borrowers and the return of what we view as questionable practices in some recent deals—such as raising bond funds to pay out shareholder dividends or sponsors—further raises concerns that the optimism might be overdone. Without a revival in top-line earnings and growth, many of the surviving leveraged issuers originated during 2003-2007 could face renewed default risk beyond the forecast horizon unless they significantly reduce their debt burdens.

Ms. Vazza has recorded a podcast to complement this article. This podcast, which will be available shortly, can be found at www.podcasts.standardandpoors.com.

The report is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor s public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.

Fitch Affirms Holcim Capital (Thailand)’s Bonds; Revises Outlook to Stable

Fitch Ratings (Thailand) Limited has today affirmed the National Long-term ‘AA-(tha)’ ratings on two series of guaranteed debentures issued by Holcim Capital (Thailand) Limited (HCT) – Series II (due 2010) and Series III (due 2012), amounting to THB4.6bn. The Outlook on the ratings has been revised to Stable from Negative, due to a similar Outlook revision of its guarantor, Holcim Ltd. (Holcim) (For more information, please refer to the rating action commentary entitled “Fitch Revises Holcim’s Outlook to Stable; Affirms IDR at ‘BBB’”, dated 29 January 2010). The ratings of HCT’s debentures are based entirely on the irrevocable and unconditional guarantee provided by Holcim (‘BBB’/Stable).


Holcim’s Outlook revision reflects Fitch’s view that its credit metrics will improve gradually in the coming 24 months, which will place them more comfortably within the range of a ‘BBB’ rating. Trading conditions for the industry in mature markets will likely to remain challenged, especially in Western Europe, while growth is expected to persist in major emerging countries. Furthermore, Fitch expects positive impact on free cash flow generation from cost reduction measures, lowered capex due to the phasing out of major investment projects, and a conservative dividend policy. This will enable Holcim to progressively improve its financial metrics at a pace faster than previously anticipated by the agency.

Fitch notes that any changes in the International rating differential between Holcim and Thailand’s Sovereign rating may affect the debentures’ National ratings. In addition, a one notch change in the International rating could result in a change of more than one notch in a National Rating.

Applicable Criteria available on Fitch’s website at www.fitchratings.com: “Corporate Rating Methodology”, dated 24 November 2009.

Contacts: Obboon Thirachit, Pimrumpai Panyarachun, Vincent Milton, Bangkok, +662 655 4755; Elisabetta Zorzi, Milan, +39 02 8790 87213.

Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable.

Friday, January 29, 2010

Distress Ratio At Its Lowest Point In More Than Two Years, Article Says

After a protracted period of economic and financial stress that began in the second half of 2007, credit conditions appear favorable at the start of 2010, said an article published today by Standard & Poor's.


The speculative-grade corporate spread is now lower than at any point in 2009, closing at 586 basis points (bps) on Jan. 15. Along with this, the distress ratio is now solidly below its long-term average, at 10.4% as of Jan. 15. This is down from 14.6% in December, according to the article, titled "U.S. Distressed Debt Monitor: Distress Ratio Falls To 10%, An Optimistic Start To The New Year."

Standard & Poor's distress ratio is defined as the number of distressed securities divided by the total number of speculative-grade-rated issues. Distressed credits are speculative-grade-rated issues that have option-adjusted spreads of more than 1,000 bps relative to Treasuries.

"The homebuilders/real estate companies and insurance sectors are posting the highest debt-based distress ratios, at 75% and 28%, respectively," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group.

"In addition, the high technology sector has a debt-based distress ratio in excess of its traditional, issue-based measure," said Ms. Vazza. "This reveals that a disproportionate amount of speculative-grade debt in this sector is attributable to distressed companies."

This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers to RatingsDirect on the Global Credit Portal at www.globalcreditportal.com and to RatingsDirect at www.ratingsdirect.com. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.

Tuesday, December 15, 2009

Health Care, Telecommunications, And Chemicals Likely Will See More Upgrades Than Other Sectors In 2010, Article Says

Credit quality is slowly beginning to stabilize across nonfinancial industries, though rating activity remains more negative than positive, said an article published today by Standard & Poor's, titled "Three U.S. Industries With The Greatest Potential To Improve Their Credit Quality In 2010 (Premium)." As the economy slowly rebounds in 2010, we expect to see areas of improvement, though upgrades likely will trail downgrades in most sectors.


"After reviewing the distribution of outlooks and CreditWatch listings, ratings trends, the performance of bond spreads, and recent operating results, we identified three sectors that we believe have the potential to see an upturn in creditworthiness next year," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "These three are health care, telecommunications, and chemicals."

Health care, which weathered the storm better than most sectors, has a relatively high positive bias (the proportion of issuers with a positive outlook or ratings on CreditWatch positive) and has seen relatively strong operating results.

The telecommunications sector also has fared well during the recession, despite having a number of highly leveraged companies. Improvement in economic and credit market conditions is supportive of continued stabilization and potential improvement in the credit quality of the telecommunications sector.

The chemicals sector has performed much worse than the other two sectors during the recession, though it has begun to show signs of stabilization. Given the cyclical nature of the sector, stronger economic conditions in 2010 could give credit quality a boost.

This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers to RatingsDirect on the Global Credit Portal at www.globalcreditportal.com and to RatingsDirect at www.ratingsdirect.com. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.

Thursday, December 3, 2009

Speculative-Grade Bond Market Conditions Have Improved, But Risks Remain

The speculative-grade corporate bond market has made a sharp turnaround from earlier in the year, said an article published today by Standard & Poor's, titled "U.S. Speculative-Grade Spreads Sector Index Review: Prices Might Be Ahead Of Fundamentals (Premium)."


"The spread on Standard & Poor's speculative-grade bond index has tightened 947 basis points this year to 700 basis points as of Nov. 12, and high-yield bond returns have eclipsed 50%," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group.

Credit quality has begun to stabilize, albeit at a very weak level. Downgrades have slowed considerably, falling to 106 in the third quarter of 2009 from 241 in the first quarter and 210 in the second quarter.

"Credit metrics, such as debt to EBITDA and interest coverage, are likely at or near the cyclical bottom. However, rapid improvement would take a surge in top-line growth, which we believe is unlikely to happen this year," said Ms. Vazza. "We expect fundamentals to remain weak for speculative-grade-rated companies in 2010."

Sectors with high leverage and low interest coverage levels such as forest products and building materials, automotive, capital goods, and media and entertainment have the highest risk premiums.

Spreads have tightened across all sectors, with some sectors, such as automotive, experiencing significant tightening, more so a result of the removal of defaulted issues from the pool rather than an increase in bond prices in the sector.

This article is part of our premium Global Fixed Income Research content, which is available to premium subscribers to RatingsDirect on the Global Credit Portal at www.globalcreditportal.com and to RatingsDirect at www.ratingsdirect.com. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.