DBS Unlikely To Have Credit Rating Cut

Source : Weekend TODAY, September 1, 2007

DBS Group Holdings Ltd’s Singapore banking unit is unlikely to have its credit ratings downgraded because of investments in collateralised debt obligations, Standard & Poor’s said yesterday.

On Monday, DBS Bank Ltd, Singapore’s biggest, said it had $2.4 billion at risk from collateralised debt obligations, more than earlier stated, after an entity it manages was forced to seek funding.

The bank stands to lose no more than $1.1 billion through its so-called conduit, called Red Orchid Secured Assets (Rosa), said Standard & Poor’s, which has a AA minus rating on DBS Bank’s long-term foreign-issuer credit status, the fourth-highest investment grade.

Most of Rosa’s assets are rated AAA, or the highest investment grade, according to Standard & Poor’s.

None are “directly exposed” to the United States sub-prime mortgage market, DBS has said.

Rosa needed financial help because of turmoil in credit markets caused by fallout from US sub-prime mortgage defaults, the bank said.

Rosa, an off-balance sheet structure called a conduit, held $1.1 billion of CDOs, which are bundles of bonds and loans. — BLOOMBERG