Fitch Downgrades CGS-CIMB TH to #A(tha)/F1(tha)#; Off Outlook Stable

Stocks and Financial Services Press Releases Monday November 19, 2018 15:18
Bangkok--19 Nov--Fitch Ratings

Fitch Ratings (Thailand) has downgraded CGS-CIMB Securities (Thailand) Co., Ltd.'s (CGS-CIMB TH) National Long-Term Rating to 'A(tha)' from 'AA-(tha)' and National Short-Term Rating to 'F1(tha)' from 'F1+(tha)'. All ratings have been removed from Rating Watch Negative, on which they were placed on 14 February 2018. The Outlook is Stable.


The downgrade reflects Fitch's revised view on the institutional support factors that drive CGS-CIMB TH's ratings. Fitch now assesses that extraordinary support for CGS-CIMB TH is likely to come ultimately from China Galaxy Securities Co., Ltd. (CGS) via CGS-CIMB International Securities Pte Ltd (CGS-CSI) - the direct parent of CGS-CIMB TH - rather than CIMB Group. Malaysian-based CIMB Group Holdings Berhad in January 2018 sold half of its stake in CGS-CSI to China Galaxy International Holdings (CGIH), a subsidiary of CGS, with potential to sell its remaining stake to CGIH. Hence, Fitch believes support from CIMB Group can no longer be relied upon.

Fitch sees CGS-CIMB TH as a core subsidiary to CGS-CSI, as reflected in CGS-CIMB TH's important role as an integral part of CGS-CSI's network in southeast Asia, brand sharing and near-full ownership. Hence, CGS-CIMB TH's rating is driven by Fitch's expectation of institutional support from CGS-CSI. However, Fitch believes CGS's propensity to provide extraordinary support to CGS-CSI is limited by the still-low synergies between the two entities and CGS-CSI's low earning contribution to CGS.


CGS-CIMB TH's ratings are sensitive to any changes in Fitch's view on CGS-CSI's credit profile, which is in turn sensitive to CGS's ability and propensity to provide support. The ratings could also change in tandem with CGS-CSI's propensity to extend extraordinary support to its Thai subsidiary. For example, a change in CGS-CSI's view of its core market or a significant reduction in ownership or level of commitment to provide financial support could indicate a weakening in support propensity, with a negative effect on the ratings.

Latest Press Release

SET and IPPD join hands to foster research on sustainable development

The Stock Exchange of Thailand (SET) and The Institute of Public Policy and Development (IPPD), under the Thai government think tank, signed a memorandum of understanding (MoU) to jointly conduct insightful and practical researches to benefit the...

Photo Release: Outstanding Women Leaders for Green Growth Award

Recently, at Grand Hyatt Erawan Hotel, Ms. Kattiya Indaravijaya, KBank President, received the "2019 Outstanding Women Leaders for Green Growth Award" for being an exemplary role model in developing businesses which are environmental friendly and an...

Mastercard Strengthens its Leading Position in Real-Time Payments in Asia Pacific with Increased Focus on Thailand

Global payments and technology leader is bringing further innovation to Thailand as part of its push to advance the regional digital payments agenda Today, at the Bangkok Fintech Fair 2019, Mastercard announced a commitment to deliver a growing suite of...

Ultra Sale on Tokinex Completed in 35 Seconds

Tokinex, the Bitfinex and Ethfinex token sale platform, today announces the successful completion of its 5m USD token sale of Ultra (UOS) in just 35 seconds. Ultra is a protocol and platform positioned to disrupt the $140bn gaming industry by using...

Photo Release: Mastercard Presents its Leading Position in Real-Time Payments at the Bangkok Fintech Fair 2019

Recently, at the Bangkok Fintech Fair 2019, Mastercard announced a commitment to deliver a growing suite of real-time and digital payments solutions across Asia Pacific through its regional real-time payments hub, with data centers in Thailand and...

Related Topics