Bangkok--13 Feb--Fitch Ratings
Fitch Ratings has today published its outlook report on Asia Pacific Structured Credit in Q1 2009 and highlights that the varied rating outlook is largely driven by the type of underlying collateral in CDO and CLO portfolios rated in the region.
"Many Asia Pacific Structured Credit transactions reference global corporates, in the form of synthetic investment grade corporate CDOs. For these transactions, the asset performance is declining and the ratings outlook is negative, reflecting the deteriorating credit environment and portfolio exposure to the financial, automotive, building and materials and retail industries," says Kate Lin, Associate Director with Fitch's Structured Credit team. While these transactions have generally seen increased ratings stability following the implementation of criteria changes in 2008, credit enhancement levels are thin or non-existent and thus these transactions are especially vulnerable to further defaults in their reference portfolios.
By way of contrast, for Structured Credit transactions with Asia Pacific assets the asset performance is stable to declining and the ratings outlook is stable. This smaller category of transactions encompasses synthetic balance sheet CLOs, cash flow CDOs of corporates, Japan Structured Finance CDOs and Taiwan domestic CDOs. "While some deterioration in the underlying portfolios is expected, these transactions typically have significantly greater levels of credit enhancement, and many have already experienced varying degrees of paydown to the senior notes," says Rachel Stringer, Managing Director of the agency's Structured Credit group.
The report, "Asia Pacific Structured Finance: Structured Credit Outlook Q1 2009" covers the asset performance and ratings outlook for Asia Pacific synthetic corporate CDOs, synthetic balance sheet CLOs and cash flow CDOs of corporates as well as Japan Structured Finance CDOs and Taiwan domestic CDOs. The report also highlights the "areas to watch" in each of these sectors.
The report can be found on www.fitchratings.com.
Contacts: Rachel Stringer, Hong Kong, +852 2263 9918; Kate Lin, Hong Kong +852 2263 9912.
Media Relations: Nicole Batchelor, Singapore, Tel: +65 6796 7214, Email: [email protected].
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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