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Fitch Ratings-Taipei/Hong Kong/Singapore-18 June 2009: Fitch Ratings has today assigned ratings and Outlooks to beneficiary certificates issued by Shin Kong Zhong Shan Building Real Estate Asset Trust ("the REAT"), as follows:
TWD613,006,210 Class A beneficiary certificates (ISIN TW00001005P7) 'AAA(twn)'; Outlook Stable;
TWD223,000,000 Class B beneficiary certificates (ISIN TW00001006P5) 'AAA(twn)'; Outlook Stable; and
TWD124,000,000 Class C beneficiary certificates (ISIN TW00001007P3) 'AAA(twn)'; Outlook Stable.
The REAT is an entrustment of the Shin Kong Zhong Shan Building (Zhong Shan Building), with Land Bank of Taiwan (Land Bank) as the trustee by Shin Kong Life Insurance Company Ltd. (Shin Kong, Insurer Financial Strength rating 'BB+'/'A-(twn)'/Outlook Negative). To fund the entrustment at closing in January 2005, the REAT issued Classes A, B and C beneficiary certificates to the investors and subordinated beneficiary certificates to Shin Kong. The REAT has a five-year expected maturity in January 2010, and a six-and-a-half-year legal final maturity in July 2011.
According to the transaction documents, the trustee needs to commence the property sale procedure the fourth year after closing in order to obtain sufficient funds for the redemptions of Classes A, B and C beneficiary certificates by the legal final maturity date. In January 2009, the trustee commenced the property sale procedure; the underlying property, Zhong Shan Building, was sold through a public auction for the price of TWD3,802m (net of property sale tax) on 30 March 2009. The title of the underlying property was transferred to the property buyer on 26 May 2009, and the property sale was consummated when the final payment of the property sale price was received on 3 June 2009.
Including varied cash reserves of TWD48m held by the trustee, the balance of cash collateral sitting in the trust accounts totaled TWD3,850m as of 12 June 2009. This cash collateral will be used to honor the principal repayment of the REAT's outstanding rated beneficiary certificates of TWD960m, as well as ongoing interests and relevant senior expenses, until the expected maturity in January 2010, amounting to a total of around TWD31.9m.
The cash collateral will mainly be managed in the form of two-month time deposits until the expected maturity date with Land Bank (as the deposit-taking counterparty). As Land Bank is a creditworthy bank with satisfactory asset quality, appropriate capitalisation level and systemic importance to the Taiwanese banking sector, the trustee's cash management plan for the available fund supports the ratings assigned.
The ratings are supported by the sufficient cash collateral fully backing the outstanding rated beneficiary certificates and relevant interests and senior expenses, as well as the appropriate cash management plan. The ratings address the timely payment of interest and the ultimate payment of principal by the legal final maturity in July 2011.
Contacts: Henry Hung, Taipei, +886 2 8175 7612/
henry.hung@fitchratings.com; April Chen, Taipei, +886 2 8175 7614/
april.chen@fitchratings.com; Tino Jang, Taipei, +886 2 8175 7611/
tino.jang@fitchratings.com.
Media Relations: Lisa Lim, Singapore, Tel: +65 6796 7214,
Email:
lisa.lim@fitchratings.com.
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.
