Bangkok--22 Jul--Fitch Ratings
Fitch Ratings has today said in a just published special report that the stable rating performance of non-Japan Asia Structured Finance transactions is expected to continue throughout the remainder of 2009. The relatively conservative base case assumptions and stress scenarios adopted for original rating analyses provide the transactions with sufficient cushion to weather the current economic downturn. Fitch currently monitors cross-border transactions backed by assets in Korea and Singapore and domestic transactions backed by assets in Taiwan and Thailand.
"The slowdown in the economies of Korea, Singapore, Taiwan and Thailand has put downward pressure on the collateral performance for many Structured Finance sectors across the region," says Henry Hung, Associate Director in Fitch's International Structured Finance team. "However, the collateral performance has been relatively stable thanks to interest rate cuts by governments and conservative asset origination practices by originators. The majority of the asset classes in the region have thus far performed in line with Fitch's expectations. Furthermore, the outstanding non-Japan Asia structured finance transactions have not experienced any negative rating actions to date," adds Mr. Hung.
Since the agency published its "2009 Non-Japan Asia Structured Finance Outlook" report on 4 February 2009, a few Outlooks have been revised, particularly for structured finance transactions backed by Singapore assets. The outlook for Singapore CMBS asset performance has been revised to Declining from Stable/Declining to reflect falling leasing demand and the decreasing average market rental level in Singapore's commercial real estate sector. Although the underlying properties' cash generating capabilities will likely weaken, Fitch expects the ratings Outlook of Singapore CMBS to remain Stable as these underlying properties still generate stable cash flows well above the agency's stabilised cash flow assumptions, and are able to withstand declines in net cash flow of between 30% - 50%, before a rating downgrade is considered. Furthermore, the refinancing risk for three Fitch-rated Singapore CMBS transactions, which are expected to mature over the course of 2009, has been greatly alleviated as the originators of these transactions have already arranged refinancing ahead of the transactions' expected maturity dates.
The ratings Outlook for Singapore residential receivables transactions has been revised to Stable from Stable/Negative. The revision reflects Fitch's expectation that the actual cash flow to date, as well as expected remaining cash flow from the underlying residential projects, will be sufficient to repay the outstanding rated notes by the transactions' legal final maturity dates. For Singapore credit card ABS, the asset performance and ratings Outlooks of the sole transaction have been revised to Declining and Negative, respectively, from Stable to account for the rising delinquencies and defaults over the past 12 months, as well as the severe economic contraction.
For Fitch-rated structured finance transactions backed by Korean assets, the collateral performance has been in line with Fitch's expectations, and the transactions are expected to weather the economic downturn on the back of high transaction credit enhancement levels and continuing stable collateral performance.
The asset performance and ratings Outlooks for domestic transactions in Taiwan and Thailand are also covered in the special report.
The special report titled, "Non-Japan Asia Structured Finance Sector Outlook - Stable Rating Performance Is Expected to Continue", provides detailed country-by-country asset performance and ratings Outlooks and is available on www.fitchratings.com.
Contacts: Henry Hung, Taipei, +886 2 8175 7612; Stan Ho, Hong Kong, +852 2263 9668.
Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215, 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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