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Ratings on Fubon Chi-Hsiang I and Chi-Hsiang III Bond Funds Raised to 'twA+f'
Taiwan Ratings Corp. today raised its bond fund ratings on both Fubon Chi-Hsiang I Bond Fund and Chi-Hsiang III Bond Fund to 'twA+f' from 'twAf'. The rating action reflects the improved credit quality and still satisfactory liquidity of the funds' investment portfolios. Moreover, the funds have grown markedly since they were taken over by Fubon Asset Management Co., Ltd. (Fubon Asset Management) from United Securities Investment Trust Co. in July 2004, despite the fact that the overall size of bond fund market has shrunk since that date. A bond fund rating, identified by the 'f' subscript, reflects the level of protection against losses from credit defaults, and is primarily based on an analysis of the credit quality of the fund's investment portfolio. The rating also takes into account the fund's liquidity, diversification, maturity profile, and management to reflect the characteristics of domestic bond funds in Taiwan. The rating is not directly comparable with a debt rating due to differences in rating criteria, and does not comment on the market price stability of the fund's assets. Fubon Asset Management is a wholly owned subsidiary of Fubon Financial Holding Co. Ltd. (Fubon FHC, twAA-/Stable/twA-1), which is one of Taiwan's leading financial groups. At the end of November 2004, Fubon Asset Management managed 23 mutual funds, including 13 equity funds, eight bond funds, and two balanced funds. It is the largest mutual fund company in Taiwan in terms of mutual funds under management, which totaled about NT$200.6 billion at the end of November 2004, representing a market share of about 7.9%. Fubon Chi-Hsiang I Bond Fund's asset size grew by 59% to NT$25.4 billion as at Dec. 8, 2004 from NT$16 billion as at the end of July 2004. Corporate bonds account for 39% of the fund's assets, financial debentures 22%, repurchase agreements (repos) 32%, structured deposits 6%, and time deposits 1%. Liquid assets, in the form of repos and non-structured time deposits, together account for about 33% of the fund's total assets. The funds' overall credit quality is strong, with most of its portfolio's securities and counterparties rated 'twA-' or above. The portfolio's weighted average maturity is about three years since long-term bonds account for 61% of the fund's total assets. Structure notes represented about 26% of its total assets as at Dec. 8, 2004. Fubon Chi-Hsiang III
Bond Fund's asset size grew by 87% to NT$16.8 billion as at Dec. 8, 2004
from NT$9 billion as at the end of July 2004. Fubon Chi-Hsiang III Bond
Fund has a similar portfolio mix as Fubon Chi-Hsiang I Bond Fund, with
corporate bonds accounting for 39% of its total assets, financial debentures
23%, repos 34%, structured deposits 3%, and time deposits 1%. Liquid assets
account for about 35% of the fund's assets. The fund's overall credit
quality is strong, and its weighted average maturity is slightly more
than three years. Structure notes represented about 22% of its total assets
as at Dec. 8, 2004.
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