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TMB Bank's unsecured debentures get 'A+' rating


Fitch Ratings (Thailand) on Friday assigned a rating of 'A+(tha)' to TMB Bank Public Company Limited's (TMB; AA-(tha)/Stable) upcoming Thai baht-denominated Basel III-compliant Tier 2 subordinated unsecured debentures.

The debenture issue will be up to Bt20 billion and have a greenshoe option of Bt10 billion. The notes will have a tenor of 10 years.
The Basel III Tier 2 notes are rated one notch below the anchor rating, TMB's National Long-Term Rating of 'AA-(tha)', to reflect the notes' subordinated status and higher loss-severity risks relative to senior unsecured instruments. 
Key terms of the notes include a non-viability trigger (defined as emergency capital assistance from the central bank or any other empowered government agency), with partial rather than mandatory full write-down features.
The Tier 2 notes are senior to any Additional Tier 1 securities with loss-absorption features. If written down, the Tier 2 notes rank pari passu with TMB's other Tier 2 loss-absorbing instruments that have write-down features.
The National Long-Term Rating is used as the anchor rating because it reflects the bank's standalone financial strength. 
Fitch believes that TMB's standalone credit profile best indicates its non-performance risk (that is, becoming non-viable). Fitch has not applied additional notching to the notes, as they have no going-concern loss-absorption features.
TMB's standalone financial strength, as reflected in the Viability Rating (VR), takes into account the bank's moderate domestic franchise as Thailand's seventh-largest bank by deposits, with a market share of about 5 per cent. 
TMB's financials have improved steadily, narrowing gaps with larger peers, particularly in asset quality. Fitch expects TMB's financials to remain stable, despite increasing risk appetite in the SME and home mortgage segments.

Published : May 10, 2019

By : The Nation