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Fitch Ratings-Taipei/Hong Kong/Singapore-11 June 2009: Fitch Ratings has today affirmed the ratings of Taiwan’s Taching Bills Finance Corporation (TCBF) as follows:
TCBF: National Long-term rating at ‘A-(twn)’, National Short-term rating at ‘F2(twn)’, Individual rating at ‘C/D’ and Support rating at ‘5’. The Outlook is Stable.
TCBF’s ratings reflect its small franchise, sound asset quality and capitalisation. Possible increases in credit costs due to the severe economic recession and the negative impact from a likely abrupt rise of interest rates - if significant enough - could lead to downward ratings pressure. TCBF positions itself as a niche fixed-income trading house, while it manages its commercial paper guarantee business restrictively. As such, TCBF’s core profitability has improved, with underlying ROE moderately increasing to 6.8% in 2008, thanks to strong trading results and better market pricing. Fitch expects TCBF to deliver reasonable net profits in 2009 as the company’s bond portfolio carries favourable yields, and is capable of withstanding potential interest rate rises. TCBF also has sound capitalisation with a capital adequacy ratio of 15% at end-2008, well above the 8% regulatory minimum requirement. The agency notes that the company actively manages its liquidity risk, as it relies on bills and bond repurchase agreements (repos) for funding. These repos are backed by generally good-quality fixed-income securities and the repo counterparties are reasonably diversified.
TCBF is a small bills finance company in Taiwan. The Ta Ching Group remains the major shareholder of TCBF, controlling 55% of TCBF.
For further details, please refer to the credit update report on TCBF, available on www.fitchratings.com.
Contacts: Yuchi Fan, Sophia Chen, Jonathan Lee, Taipei, +886 2 8175 7600.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
