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Fitch Ratings-Taipei/Paris/Singapore-11 August 2009: Fitch Ratings has today affirmed AIG Taiwan Bond Fund's credit rating at 'AA(twn)' and upgraded its volatility rating to 'V1(twn)' from 'V3(twn)'. Fitch has simultaneously withdrawn the ratings. The agency will no longer provide analytical coverage for this fund.
The 'AA(twn)/V1(twn)' ratings reflect the fund's good underlying credit quality, conservative investment policies, and strong liquidity capacity. The fund, as a quasi money-market fund, aims to preserve principal value and provide a high degree of liquidity. It was managed according to conservative investment practices regarding asset types, credit quality and maturity profile.
The upgrade of the volatility rating reflects the fund's much-reduced risk adjusted duration, which is in line with Fitch's rating criteria on funds. The fund has prepared for a transition to become a money market fund (possibly in 2010) and intends to gradually reduce assets with maturities of greater than one year. The fund has materially reduced its weighted-average duration to 0.2 years at end-June 2009 from 0.8 years at end-2005. Securities with a maturity of one year or less account for 79% of current total asset under management (AUM). In Fitch's opinion, the fund has strong liquidity to meet redemptions, given its notably enhanced liquidity profile.
The fund meets very high standards of credit quality based on Fitch's national rating scale. Internal guidelines require a minimum 'AA-(twn)' rating on corporate bond assets. Transaction counterparties are highly-rated and based on global lists of eligible names (which are subject to meeting AIG group's global standardised credit policy). Furthermore, conservative diversification rules ensure the fund exhibits a credit quality similar to a well-diversified fund composed of 'AA(twn)'-rated assets.
The fund suffered some withdraws at the time of the Lehman Brothers fallout last September, but has quickly recovered. Its AUM rose by 19% between June 2008 and June 2009, in line with the overall growth of 19% in quasi money-market funds.
The fund is managed by AIG Investments Management Corp Taiwan Ltd. (AIGIMC). AIGIMC is a wholly-owned subsidiary of American International Group, Inc. ('BBB'/Evolving Outlook) and had TWD28bn of AUM at end-June 2009, of which TWD12bn were in quasi money-market funds.
Contact: Yuchi Fan, Jonathan Lee, Taipei, +886 2 8175 7600.
Note to Editors: Fitch's national bond fund credit ratings are assigned on a scale of 'AAA(twn)' to 'D(twn)', and the rating scale is similar to that of Long-term credit ratings. Meanwhile, the volatility ratings are assigned on a scale of 'V1(twn)' (least volatile) through 'V10(twn)' (most volatile). These ratings provide a relative measure of creditworthiness and volatility in comparison with other bond funds only within Taiwan and are thus not internationally comparable.
Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215,
Email:
shivani.sundralingam@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. The issuer did not participate in the rating process other than through the medium of its public disclosure.
