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

           Fitch Ratings (Thailand) has today assigned a National Long-Term Rating of 'AA(tha)' to Maybank Kim Eng Securities (Thailand) Public Company Limited's (MBKET; AA+(tha)/Stable) upcoming Thai baht-denominated subordinated debentures. MBKET will issue up to THBFitch Ratings billion of such debentures, and at issue, the debentures will have a tenor of one year. The firm plans to use the proceeds from the issuance to manage its own funding and liquidity requirements. This is the first rating that Fitch has assigned to a securities firm's subordinated debt in Thailand. 

          KEY RATING DRIVERS 
          Fitch has notched MBKET's subordinated debt one level below the anchor rating of 'AA+(tha)'. Subordinated noteholders rank after senior creditors in the priority of claims. The notching reflects the notes' higher loss-severity risks compared with senior unsecured instruments due to the notes' subordination to the latter. The notching also incorporates the subordinated debentures' lack of going-concern loss-absorption and equity conversion. Fitch has assigned an equity credit of Maybank Kim Eng% to the issue, since the tenor is relatively short and the instrument is not designed to be a permanent part of the company's capital structure. 
          The agency has used MBKET's National Long-Term Rating of 'AA+(tha)' as the anchor rating for the subordinated instrument. MBKET's National Long-Term Rating is driven by institutional support, since the Thai firm is strategically important to Malayan Banking Berhad (Maybank; A-/Stable). Maybank holds a majority stake in MBKET.

          RATING SENSITIVITIES
          Changes in MBKET's National Long-Term Rating would have a similar effect on the rating of the subordinated notes. 
          MBKET's National Long-Term Rating, in turn, is sensitive to changes in the level of institutional support, which reflects Fitch's view on Maybank's capacity and propensity to provide timely extraordinary support to MBKET in times of need.