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April 2, 2008 |
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SHINSEI BANK: Fitch Maintains BB+ Support Rating Floor Fitch Ratings has affirmed the ratings of Japan's Shinsei Bank, Ltd and Shinsei Trust and Banking Co., Ltd: Shinsei: Long-term foreign and local currency Issuer Default Ratings at 'BBB+', Short-term foreign and local currency IDRs at 'F2', Individual 'C', Support '3', Support Rating Floor 'BB+', senior unsecured notes at 'BBB+' , subordinated notes at 'BBB' and junior subordinated notes at 'BBB-'. The Outlook remains Stable. Shinsei Trust: Long-term foreign and local currency IDRs at 'BBB+', Short- term foreign and local currency IDRs at 'F2', Individual 'C' and Support '2'. The Outlook remains Stable. The rating affirmations follow the announcement that the preference shares held by the Deposit Insurance Corporation were converted into common equity as requested by the DIC. This increases the government's stake in Shinsei's common equity and voting rights to 23.89% but there is no net impact on the bank or group's regulatory capital ratios. Shinsei's ratings reflect its adequate financial profile. The group's institutional banking business is performing well but its retail banking arm has yet to make a material profit contribution. The group's consumer lending businesses have been suffering from industry turmoil, and a large charge for the impairment of goodwill and intangible assets relating to these businesses resulted in a net loss in Fiscal Year Ended March 2007. In FYE08 sizeable losses on exposure to the US residential mortgage market and the delay of recognition of the sales of large transactions among others are being offset by exceptional gains on the sale of the bank's headquarters building and other assets and the group expects a net profit of JPY65 billion. In the past two years Shinsei's capital ratios have been affected by weak profitability, the repurchase and partial cancellation of government-owned preference shares and the implementation of Basel II, especially on investments attracting a high capital charge. Shinsei's Tier 1 capital adequacy ratio of 8.11% and Total of 13.13% at March 2007 had fallen to 7.45% and 12.10%, respectively, as of December 2007. Fitch considers these capital levels to be adequate at its current rating level, but not strong. The Outlook for Shinsei's is Stable, though Fitch sees some downside risk, in the short-term, arising from securitisation exposures which could give rise to further valuation losses. However, exposures to the US residential mortgage market have been heavily reserved/marked down and the group's domestic consumer lending business appears to be stabilising which is an encouraging development for the group's medium-to-longer-term prospects. Fitch will review the bank's financial condition later this year when comprehensive information becomes available. Tuesday's edition of the TCR-AP delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-AP editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Tuesday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-AP constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-AP editor holds some position in the issuers' public debt and equity securities about which we report. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR-AP. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Friday's edition of the TCR-AP features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. |
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