New UOB fund to focus investment

UOB Asset Management (Thai) yesterday launched UOB Financial Institution Guarantee 12/1 (UOB FIG 12/1), with a policy to invest at least 80 per cent of its net asset value in the US dollardenominated debt instruments issued by Danske Bank, Denmark's largest bank with assets of Bt21 trillion.

The debt instrument is guaranteed by the Danish government and the overseas investment is fully hedged, UOB Asset Management said.

Moreover, the issuer's credit rating has been assigned by Standard & Poor's at A+, Moody's Investors Service at Aa3, and Fitch Ratings at A+.

The debt instrument is expected to be rated AAA by S&P, Aaa by Moody's and AAA by Fitch.

Fitch has affirmed Denmark's longterm foreign and local currencyissuer default ratings at AAA with a stable outlook, while it rated South Korea at A+ with a negative outlook.

As of February 26, creditdefault swaps (CDS) - the risk barometer for investors - on Denmark ranked the fourth lowest in the world, after Norway, Japan and the United States.

"The debt instrument [issued by Danske Bank] is expected to offer around 1 percentage point on top of the Thai government bond with the same maturity," said UOB Asset Management CEO Vana Bulbon.

Even though South Korean bonds offer a higher return, they carry higher risk as measured by credit ratings and CDS.

UOB FIG 12/1 features auto redemption two days before the fund comes due next year, and proceeds from the investment will be automatically transferred to UOB Sure Daily - a fixedincome fund - on maturity.

The fund is in line with the policy of the company's parent to concentrate on conservative investment this year.

If the fund receives a good response from the public, the company might launch a similar product in the near future, Vana said.

UOB FIG 12/1 is making an initial public offering from today until next Tuesday. The initial minimum purchase has been set at Bt4 billion.

UOB Asset Management also has plans to roll out a gold fund, but will only go public when the timing is right, Vana added.