Bangkok--6 Dec--Fitch Ratings
Fitch Ratings said in a special report published today that it expects most outstanding ratings of non-Japan Asia (NJA) structured finance (SF) transactions to be stable in 2012. "The uncertainties surrounding the global economy are not expected to materially affect NJA SF transactions. Asset performance in South Korea (Korea) is projected to deteriorate mildly, though the 'AAAsf' ratings remain sustainable. In Singapore, cash flows of the Fitch-rated CMBS transactions are expected to be strong in 2012," said April Chen, Associate Director in Fitch's NJA SF team.
The agency notes that the current high household debt in Korea will put the performance of securitised assets under pressure. However, the rating Outlooks of Fitch-rated Korean SF transactions remain stable, given the low unemployment rate and benign domestic interest rate environment. The strong asset performance to date and low loan-to-value ratios of the mortgage portfolios of RMBS, healthy payment rates, plus structural mechanisms, such as eligibility criteria for card and auto loan ABS, also support the Stable Outlook.
The robust rental revenue in Singapore's retail property sector in 2011 is forecast to continue in 2012. However, Singapore's office and hotel sectors are deemed relatively sensitive to the performance of the global economy, given the country's position as a regional business hub, and as a large portion of its visitors are either international business or leisure travellers. Nevertheless, Fitch-rated transactions are able to withstand a 20%-50% decline in net cash flow from Q311 levels before any of the 'AAAsf' rated tranches are likely to suffer negative rating actions. Fitch deems the refinancing risk in 2012 for Fitch-rated Singapore CMBS transactions low, given the good quality of the underlying properties and the originator's strong credit profile.
In Thailand, the recent flooding has caused widespread damage, resulting in business disruption and loss of livelihood. Consequently, the performance of Thailand credit card transactions will be affected, and it may take a few months to ascertain the magnitude of the impact. Barring the fallout from major flooding in October and November 2011, the performance of credit card portfolios has been stable and within Fitch's base case assumptions.
Fitch also covers the performance of SF transactions in Taiwan and non-Japan Asia CDOs in the report.
Details of the individual sector outlooks can be found in the report, "2012 Outlook: Non-Japan Asia Structured Finance" which is available at www.fitchratings.com or by clicking on the link above.