Bangkok--10 Feb--Fitch Ratings
Fitch Ratings has today said there were a record number of rating actions in Asia Pacific Structured Finance during the fourth quarter of 2008. The majority of negative rating actions were driven by the downgrade of counterparties to transactions or corporates. Over 200 tranches (including public, private, international and national ratings) were downgraded, while seven were upgraded. Additionally, around 370 tranches were affirmed, accounting for approximately 30% of all outstanding tranches rated by Fitch.
"The negative prospects for future performance are reflected in the approximately 80 tranches currently on Rating Watch Negative (RWN) and around 140 to which Negative Outlooks have been assigned," notes Alison Ho, Director and Head of Performance Analytics within the agency's Asia Pacific Structured Finance team. "As in Q308, most downgrades in Q408 were driven by external factors rather than by collateral deterioration, with CDOs once again being hardest hit by continued rating actions as a result of global corporate credit events in portfolios. The continued fall out from Lehman's bankruptcy affected not only CDOs but Japanese CMBS as well," adds Ms. Ho.
Japanese CMBS and Indian ABS account for the majority of tranches currently on RWN. In Japan, upcoming loan maturities continue to provide cause for concern given the lack of refinancing opportunities and liquidity in the commercial real estate sector, and the consequent pressure on property values. In India, ratings assigned to single loan sell down transactions are linked to those of the underlying obligor. The real estate sector is experiencing a downturn and rating actions on Unitech Limited resulted in nearly 80 downgrades during Q408, with around a further 30 downgraded in January 2009.
Negative Outlooks are currently assigned to around 140 SF tranches, the largest portion being RMBS backed by loans in Australia and New Zealand, where Fitch's Outlook on the providers of lenders' mortgage insurance is Negative. The Rating Outlooks on some CMBS is also Negative, predominantly in Japan.
Ben McCarthy, Head of Asia Pacific Structured Finance notes: "Although Q408 saw a record number of rating actions, Asia Pacific Structured Finance ratings generally performed well in 2008, as the impact of the global financial crisis was slow to reach the region. With the full force of the global crisis likely to hit the region in 2009 we expect negative ratings actions to be increasingly the result of asset performance, although deteriorating counterparty ratings, as evidenced by the current Outlooks and Negative Watches, will continue to be a factor in future ratings actions".
Individual press releases relating to specific rating actions can be found on Fitch's website at www.fitchratings.com.
Contact: Alison Ho, Hong Kong, +852 2263 9937; Ben McCarthy, Sydney, +612 8256 0388.
Media Relations: Nicole Batchelor, Singapore, Tel: +65 6796 7214, Email: [email protected].