Bangkok--17 Feb--Fitch Ratings
Fitch Ratings has today said in a just released special report, "Japanese Structured Finance: 2008 Review and 2009 Outlook", that it broadly expects Negative Outlooks on the underlying assets in the Japanese structured finance market in, but notes that its rating Outlook will vary by asset class.
The report provides a credit review, with focus on the key factors driving credit ratings in each structured finance sector of asset-backed securities, collateralised debt obligations, commercial and residential mortgage-backed securities and servicers.
In 2008, the adverse affect of the US subprime crisis gradually materialised in the Japanese structured finance market. The magnitude of the impact on assets, and, in turn, on rating performance varied significantly, depending on the relationships between the individual asset classes and the US subprime issue.
Entering 2009, it is Fitch's expectation that the economic fundamentals for Japan will deteriorate in line with the global economy. Fitch's sovereign analysts are predicting GDP growth for the calendar year 2009 at negative 1.7% which will likely result in increased unemployment. Japan's slowing economy, rising unemployment rate and falling prices of both residential and commercial property will likely result in a deterioration in asset performance during 2009.
However, the ultimate impact on ratings will vary depending on the asset/structure features and vintages of individual deals. In the ABS and RMBS sectors, while the prolonged recession may further deteriorate the underlying pool qualities, the structural protections are expected to function as mitigating factors. The rating Outlook of CMBS generally varies depending on the seniorities and vintages, while that of CDOs is dependent on the underlying asset sectors.
The report is available on the agency's global website at www.fitchratings.com.
Contacts: Masaaki Kudo, Atsushi Kuroda, Mitsuhiro Ueno, Tokyo, Tel: +81 3 3288 2644.
Media Relations: Nicole Batchelor, Singapore, Tel: +65 6796 7214, Email: [email protected]; Chinatsu Ozaki, Tokyo, Tel: +813 3288 2679, Email: [email protected].
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