Bangkok--17 Feb--Moody's
Moody's Investors Service says in a new report that the Asian non-derivative securitization markets will in 2009 continue to show as in 2008 a lack of investor interest and widening spreads.
The new report which reviews 2008 and looks at the outlook for 2009, and is authored by Moody's analysts in the region attributes the situation to the continued turmoil in the credit markets and the global economic downturn. Each market in the region is also affected by specific individual factors.
Looking back on 2008, Korea the largest securitization market in Asia showed it was not immune from the turmoil in the global financial markets as issuance almost came to a halt in the fourth quarter.
In terms of the performance of the underlying assets credit card, auto loan and residential mortgage loan receivables delinquency ratios were low during 2008, but will inevitably be affected by the economic slowdown looming in Korea.
The new report also says that Moody's has a negative outlook on asset performance for Korean ABS transactions, but it does not see any immediate rating implications as these deals have structural mechanisms to protect against performance deterioration.
And for Korean RMBS transactions, Moody's has a stable outlook on asset performance as the loans have relatively low loan-to-value ratios and would benefit from the current low interest rate environment.
In Singapore, securitization issuance had been thriving until 2008. But in view of current market uncertainty, sponsors are now looking at alternative funding sources. Furthermore, Moody's has a negative outlook on asset performance for Singaporean CMBS, but sees limited rating implications. However, transactions with immediate refinancing requirements in the next couple of years may have higher rating volatility.
During 2008, four other domestic markets in the region also generated activity. Issuance in India was mainly in ABS. At the same time, Indonesia had launched its first RMBS transaction in February 2009, while China continued its quest to develop its own securitization market with transactions closing under its pilot program. Finally, issuance in Malaysia was down because Cagamas was absent from the market.
The region's other markets namely Taiwan, Hong Kong and Thailand all had a quiet 2008, and in each case for their own unique reasons. Taiwan had two RMBS transactions approved by the regulator but they could not close due to a loss in investor confidence. Hong Kong has never been active and 2008 was no exception. Meanwhile, Thailand's political turmoil sent business and consumer confidence plummeting and market conditions were not conducive to securitization.
The report, entitled "Asian Markets Slowing and Continue to be Affected by Global Volatility," is now available at www.moodys.com.
Hong Kong
Jerome Cheng
VP - Senior Credit Officer
Structured Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 3551-3077
Hong Kong
Marie Lam
Vice President - Senior Analyst
Structured Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 3551-3077