Bangkok--15 May--Fitch Ratings
Fitch Ratings has today said negative structured finance rating actions during the first quarter of 2009 (Q109) in Asia Pacific were driven by the downgrade of Indian corporates and the continued deterioration in the Japanese commercial real estate sector. In total, 55 tranches (including public, private, international and national ratings) were downgraded, while five were upgraded. Additionally, 159 tranches were affirmed, accounting for approximately 13% of all outstanding tranches rated by Fitch in the region. "Economic conditions in India resulted in the majority of structured finance rating downgrades in the first quarter of 2009, with the remainder being largely Japanese CMBS," notes Alison Ho, Director and Head of Performance Analytics within the agency's Asia Pacific Structured Finance team. "As in the previous two quarters, Japanese CMBS experienced downgrades in Q109, driven in part by the assumption that replacements will not be found for roles previously carried out by Lehman," adds Ms. Ho.
Indian single loan sell down transactions accounted for 32, or nearly 60% of downgrades in Q109, following negative rating actions on Sobha Developers Limited, TV18, Unitech Limited and Wockhardt Ltd. The Japanese CMBS sector saw 16 downgrades (30%) during the same period, seven of which were related to the ongoing replacement procedures in one transaction for the advance provider in light of the bankruptcy of Lehman Brothers Group. The remainder reflected Fitch's concerns regarding expected recovery amounts in light of the current illiquid Japanese real estate market as well as the quality of the underlying property portfolios. The remaining 10 downgrades were split between Australian and New Zealand CMBS and RMBS, plus two ABCP transactions from Australia and Thailand. All Fitch-rated tranches in Asia Pacific that are currently on Rating Watch Negative, are either from Japanese CMBS or Indian ABS transactions. The Class B notes of Nautilus Trust No 1 Series 2007-1 were placed on Rating Watch Evolving in March 2009, pending finalisation of documentation with regards to a reallocation of cash from the spread reserve account to the Class C note providing further credit enhancement.
Negative Outlooks were assigned to around 30 structured finance tranches in Asia Pacific during Q109, more or less evenly distributed between Australia, New Zealand and Japan. In Australia and New Zealand, Negative Outlooks are currently assigned to a mixture of small balance CMBS transactions due to loss expectations, as well as prime and non-conforming RMBS due to both performance concerns and the continued Negative Outlook on mortgage insurers. Negative Outlooks were also assigned to one Korean tranche and one Singaporean residential receiveables transaction during the quarter. The latter was subsequently affirmed and the Outlook revised to Stable in April 2009.
Upgrades were seen in one Korean RMBS transaction where three tranches from one transaction were upgraded following a significant build up in credit enhancement and asset performance within expectations. One Japanese RMBS tranche was upgraded for the same reason.
Individual press releases relating to specific rating actions can be found on Fitch's website at www.fitchratings.com.
Contacts: Alison Ho, Hong Kong, +852 2263 9937; Ben McCarthy, Sydney, +612 8256 0388.
Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215, Email: [email protected].