Taiwan's Cathay Fin sees no writedowns from CBOs
TAIPEI, Aug 26 (Reuters) - Cathay Financial (2882.TW), Taiwan's No.2 financial holding firm, said on Tuesday its investment in collateralised bond obligations (CBO) totalled T$25.68 billion ($815 million) in the second quarter, flat from the previous three months.
"The most part of the asset pool is very good, with some 76.3 percent in AAA rating," chief strategic officer C. K. Lee told investors in response to queries on its credit-related holdings.
Lee added the company was unlikely to write-off the CBOs as they were linked to the domestic Taiwan market, not the battered U.S. housing market, and were priced in Taiwan dollars.
CBOs are typically investment-grade bonds backed by diversified pool of junk bonds with varying degrees of risk.
Cathay Financial has been hit by fallout from the U.S. subprime mortgage crisis and ensuing turmoil in global credit markets. In March, the company made T$1.76 billion in write-downs against its investments in collateralised debt obligations (CDO).
Cathay Financial posted a 65 percent fall in its June-quarter net profit from a year earlier, as beaten-down Taiwan stocks weighed on profits at its insurance and banking business. [ID:nTP89233].
Shares of the company ended 1.97 percent lower on Tuesday, lagging a 0.94 percent slide on the broader TAIEX market . ($1=T$31.5) (Reporting by Faith Hung)
