Fitch Rates MBKET's Thai Baht Subordinated Debentures 'AA(tha)'

KEY RATING DRIVERS

Fitch has notched MBKET's subordinateddebt one level below the anchor rating of 'AA+(tha)'. The notching reflects thenotes' higher loss-severity risks compared with senior unsecured instruments assubordinated noteholders rank after senior creditors in the priority of claims.The notching also incorporates the subordinated debentures' lack ofgoing-concern loss-absorption and equity conversion. Fitch has assigned anequity credit of 0% to the issue, since the tenor is relatively short and theinstrument is not designed to be a permanent part of the company's capitalstructure.

The agency has used MBKET's NationalLong-Term Rating of 'AA+(tha)' as the anchor rating for the subordinatedinstrument. MBKET's National Long-Term Rating is driven by institutionalsupport, since the Thai firm is strategically important to Malayan BankingBerhad (Maybank; A-/Stable), which holds a majority stake in MBKET.

RATING SENSITIVITIES

Changes in MBKET's National Long-TermRating would have a similar effect on the rating of the subordinated notes.

MBKET's National Long-Term Rating, inturn, is sensitive to changes in the level of institutional support, whichreflects Fitch's view on Maybank's capacity and propensity to provide timelyextraordinary support to MBKET in times of need.

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