Fitch Affirms 5 Thai Non-Bank Subsidiaries of Foreign Financial Institutions

           Fitch Ratings (Thailand) has affirmed the National Long-Term Ratings on five Thailand-based non-bank subsidiaries of foreign financial institutions as follows:

          EASY BUY Public Company Limited (EB) at 'AA+(tha)'
          Maybank Kim Eng Securities (Thailand) Public Company Limited (MBKET) at 'AA+(tha)' 
          Yuanta Securities (Thailand) Company Limited (YSTH) at 'AA(tha)'
          Capital Nomura Securities Public Company Limited (CNS) at 'AA(tha)'
          CGS-CIMB Securities (Thailand) Co., Ltd. (CGS-CIMB TH) at 'A(tha)'

          The Outlooks on all five entities are Stable. 
          The agency also affirmed the National Long-Term Ratings of Thai ORIX Leasing Company Limited's (TOLC) Thai baht guaranteed bonds at 'AAA(tha)' with Stable Outlooks. 
          A full list of rating actions is included at the end of this commentary.
          
          KEY RATING DRIVERS 
          NATIONAL RATINGS AND SENIOR DEBT
          The ratings of EB, MBKET, YSTH, CNS, and CGS-CIMB TH are driven by Fitch's expectations of institutional support from their respective parents, ACOM CO., LTD. (ACOM; A-/Stable), Malayan Banking Berhad (Maybank; A-/Stable), Yuanta Financial Holding Co., Ltd. (YFHC; BBB+/Stable), Nomura Holdings, Inc. (NHI; A-/Stable, Viability Rating: bbb+) and CGS-CIMB Securities International Pte. Ltd. (CGS-CSI). 

          Fitch believes EB, MBKET, YSTH, and CNS are strategically important subsidiaries as they play a key role in their groups' regional strategies, taking advantage of the potential synergies with their parents' operations. The parents also have majority stakes in their subsidiaries, and exercise a high degree of management control, with evidence of integration and ongoing financial support.
          Fitch sees CGS-CIMB TH as a core subsidiary of CGS-CSI because it plays an important role as the group's second-largest subsidiary and forms an integral part of CGS-CSI's network. Furthermore, there is near-full ownership by CGS-CSI and brand sharing. CGS-CSI's ability to support CGS-CIMB TH comes ultimately from China Galaxy Securities Co., Ltd. (CGS) whose credit profile is based on support from the Chinese sovereign (A+/Stable).
          CNS's National Ratings are driven by NHI's Viability Rating rather than the parent's Long-Term Issuer Default Rating (IDR). This is because NHI's IDR is driven by support considerations from the Japanese sovereign (A/Stable) based on its systemically important status in Japan, and Fitch believes that such support may not necessarily flow through to non-core subsidiaries. 
          Fitch has equalised the senior debt ratings of EB with its National Long-Term Rating, reflecting Fitch's approach for rating senior debt instruments.
          Similarly, the short-term debenture programmes of CNS and YSTH are rated at the entities' National Short-Term Ratings as issuance under the programme constitutes their unsubordinated and unsecured obligations.

          GUARANTEED BONDS
          The National Long-Term Ratings on TOLC's guaranteed bonds are based entirely on irrevocable and unconditional guarantees provided by its parent, Japan-based ORIX Corporation (ORIX: A-/Stable). ORIX's Long-Term Foreign-Currency IDR of 'A-' is higher than Thailand's Long-Term Local-Currency IDR of 'BBB+', and correlates to the highest rating on Thailand's National Rating scale of 'AAA(tha)'.

          SUBORDINATED DEBT
          Fitch rates the subordinated debt of MBKET and YSTH one level below their National Long-Term Ratings as the debt carries higher loss-severity risks than senior unsecured instruments, which rank higher in the priority of claims. The notching also incorporates the subordinated notes' lack of going-concern loss-absorption and equity-conversion features.

          RATING SENSITIVITIES
          NATIONAL RATINGS AND SENIOR DEBT
          The ratings of MBKET, EB, YSTH, CNS and CGS-CIMB TH are sensitive to changes in Fitch's views on the credit profiles of their respective parents, and would likely move in line with any such changes. 

          The agency may take negative rating action on these five entities if the parents' propensity to support the subsidiaries were to decline - for example, if there were significant reductions in ownership, financial linkages, or management control. Conversely, Fitch may upgrade the ratings for MBKET, EB, YSTH and CNS if these subsidiaries raise their profit contribution, which would increase their strategic position within their groups. 

          Changes in the National Ratings of EB, YSTH, and CNS would have a similar impact on their senior debt ratings. 

          GUARANTEED BONDS
          The ratings of TOLC's guaranteed bonds are the highest on the national scale, implying there is no rating upside. Fitch could downgrade the National Long-Term Ratings of TOLC's guaranteed bonds if ORIX's Long-Term Foreign-Currency IDR were to be at or below Thailand's Long-Term Local-Currency IDR, either by a downgrade of ORIX itself or an upgrade of Thailand's Long-Term Local-Currency IDR.

          SUBORDINATED DEBT
          Changes in the National Long-Term Ratings on MBKET or YSTH would have a similar effect on the ratings of their subordinated notes. 

          The rating actions are as follows: 

          MBKET:
          - National Long-Term Rating affirmed at 'AA+(tha)'; Outlook Stable
          - National Short-Term Rating affirmed at 'FFitch Ratings+(tha)'
          - National Long-Term Rating on Thai baht subordinated debt affirmed at 'AA(tha)' 

          EB: 
          - National Long-Term Rating affirmed at 'AA+(tha)'; Outlook Stable
          - National Short-Term Rating affirmed at 'FFitch Ratings+(tha)' 
          - National Long-Term Rating on senior unsecured bonds affirmed at 'AA+(tha)'

          YSTH:
          - National Long-Term Rating affirmed at 'AA(tha)'; Outlook Stable
          - National Short-Term Rating affirmed at 'FFitch Ratings+(tha)' 
          - National Short-Term Rating on senior unsecured debt programme affirmed at 'FFitch Ratings+(tha)'
          - National Long-Term Rating on Thai baht subordinated debt affirmed at 'AA-(tha)' 
          - National Long-Term Rating on US dollar subordinated debt affirmed at 'AA-(tha)' 

          CNS:
          - National Long-Term Rating affirmed at 'AA(tha)'; Outlook Stable
          - National Short-Term Rating affirmed at 'FFitch Ratings+(tha)'
          - National Short-Term Rating on senior unsecured debt programme affirmed at 'FFitch Ratings+(tha)'

          CGS-CIMB TH
          - National Long-Term Rating affirmed at 'A(tha)'; Outlook Stable
          - National Short-Term Rating affirmed at 'FFitch Ratings(tha)'

          TOLC
          - National Long-Term Rating on bonds guaranteed by ORIX affirmed at 'AAA(tha)' ; Outlook Stable