Fitch affirms China Bills

Fitch Ratings said it affirmed China Bills Finance Corp.'s long-term foreign-currency issuer default rating at BBB with a stable outlook, short-term foreign-currency issuer default rating at F3, national long-term rating at A+(twn) with a stable outlook, national short-term rating at F1(twn), viability rating at bbb, support rating at 4 and support rating floor at B+.

The agency said the affirmation reflects China Bills' longstanding leading position in the Taiwanese money market, its satisfactory asset quality and its continued sound balance sheet strength. These strengths have defended the company from the industry's structural weaknesses such as susceptibility to interest-rate changes and reliance on wholesale funding and intense competition from banks, Fitch said.

China Bills' largest shareholder with a 28% stake, Industrial Bank of Taiwan, plans to merge with China Bills. Fitch said this may have a negative rating impact on the latter because of Industrial Bank of Taiwan's higher risk profile inherent in its principal investment-based business model and because of a likely more aggressive growth strategy if the merger is successful.

The merger is still subject to shareholder and regulatory approval, which is not expected within Fitch's rating outlook horizon.

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