TRIS Rating Co., Ltd. has affirmed the company rating of TSFC Securities Ltd. (TSFC) at “A” and has also affirmed the rating of its proposed up to Bt1,000 million subordinated debentures at “A-” with “stable” outlook. The ratings reflect TSFC’s capable management team, the ability to sustain its leading market position in margin loans (credit balance financing), sound asset management, and sufficient liquidity. The ratings also take into consideration good prospects for the stock market in the medium term, which would help support the company’s growth. However, these strengths are partially offset by the high volatility of the stock market.
The “stable” outlook is based on the expectation that TSFC will be able to maintain its leading position in the margin loans business. TSFC is expected to maintain an acceptable capital level while expanding its loan portfolio. Most importantly, asset quality is expected to remain good should TSFC retain its conservative credit and investment management policies. The rating outlook is also premised on the expectation of good medium-term prospects for the stock market despite fluctuations.
TRIS Rating reported that TSFC is the only company licensed to conduct securities financing in Thailand. Driven by higher demand for margin loans in 2003, TSFC became the market leader in margin loans, with 22% market share. In 2005, market share rose to 29%, which was built upon a sizable portfolio of margin loans. Most of TSFC’s margin loans are classified as normal and the company’s investment exposures are largely in government debt securities and investment-grade corporate debt securities.
TRIS Rating also said that TSFC’s liquidity is considered sufficient. The company has established relationships with various funding sources to finance its business. Profits have risen steadily since 1998, except for a decline in 2005. Profitability, as measured by net interest spread and return on assets, declined in 2005 due to higher provisions and a higher cost of funding. TSFC has also launched other businesses, including mutual fund guarantees and stock borrowing and lending, but the ability to generate substantial revenue from
these new businesses has yet to be proved. Although TSFC’s capital structure has been weakened by
rapid growth in assets in 2003 and 2004, capital funds are sufficient to finance normal business
expansion. However, if the rapid growth were to continue, the growth will strain the company’s capital structure. — End
TSFC Securities Ltd. (TSFC)
Company Rating: Affirmed at “A”
Issue Rating:
Up to Bt1,000 million subordinated debentures due 2010-2012 Affirmed at “A-”
Rating Outlook: Stable
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Copyright 2006, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.
The “stable” outlook is based on the expectation that TSFC will be able to maintain its leading position in the margin loans business. TSFC is expected to maintain an acceptable capital level while expanding its loan portfolio. Most importantly, asset quality is expected to remain good should TSFC retain its conservative credit and investment management policies. The rating outlook is also premised on the expectation of good medium-term prospects for the stock market despite fluctuations.
TRIS Rating reported that TSFC is the only company licensed to conduct securities financing in Thailand. Driven by higher demand for margin loans in 2003, TSFC became the market leader in margin loans, with 22% market share. In 2005, market share rose to 29%, which was built upon a sizable portfolio of margin loans. Most of TSFC’s margin loans are classified as normal and the company’s investment exposures are largely in government debt securities and investment-grade corporate debt securities.
TRIS Rating also said that TSFC’s liquidity is considered sufficient. The company has established relationships with various funding sources to finance its business. Profits have risen steadily since 1998, except for a decline in 2005. Profitability, as measured by net interest spread and return on assets, declined in 2005 due to higher provisions and a higher cost of funding. TSFC has also launched other businesses, including mutual fund guarantees and stock borrowing and lending, but the ability to generate substantial revenue from
these new businesses has yet to be proved. Although TSFC’s capital structure has been weakened by
rapid growth in assets in 2003 and 2004, capital funds are sufficient to finance normal business
expansion. However, if the rapid growth were to continue, the growth will strain the company’s capital structure. — End
TSFC Securities Ltd. (TSFC)
Company Rating: Affirmed at “A”
Issue Rating:
Up to Bt1,000 million subordinated debentures due 2010-2012 Affirmed at “A-”
Rating Outlook: Stable
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Copyright 2006, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.