Bangkok--11 Jan--Fitch Ratings
Fitch Ratings has today said that the performance of structured finance transactions in non-Japan Asia remained stable in Q409, as demonstrated by the fact that two publicly rated tranches (including international and national ratings) were upgraded, two were downgraded, and a total of 24 were affirmed during the quarter.
"The performance of the outstanding structured finance transactions in Q409 has been steady or has improved," said Alex Choi, Associate Director in Fitch's Asia Pacific Structured Finance team. "Most rated tranches continue to perform well within Fitch's base case assumptions, as supported by the fact that most rating actions were affirmations during the quarter," adds Mr. Choi.
Two tranches from Triumph Assets Limited, which is a CMBS transaction backed by retail properties in Hong Kong, were upgraded based on robust debt service coverage ratio and that refinancing risk in June 2010 was mitigated as financing had been secured by the originator, Fortune REIT.
Meanwhile, the two downgrades are related to two tranches from Cathay Dun Nan Commercial Building Real Estate Asset Trust, which is a CMBS transaction backed by part of the Dun Nan Commercial Building in Taiwan. The downgrades reflect the worsening performance of the entrusted property, which had a persistent low occupancy rate and lower than expected average rental level resulting from rental discounts and long rent-free periods offered to tenants. The reported net operating income was lower than Fitch's stabilised assumption. Leasing agreements accounting for over 30% of gross monthly rental income are due to expire in 2010. All tranches in the transaction were put on Rating Watch Negative on account of lease renewal uncertainty and deteriorating property cashflows.
Among the 24 affirmed tranches, one is a Hong Kong CMBS tranche, two are Korean ABS tranches, three are Taiwanese CMBS tranches, five are Singapore CMBS tranches, two are Singapore ABS tranches, seven are Thai CMBS tranches, and four are Thai ABS tranches.
At the end of December 2009, over 60 outstanding structured finance tranches in non-Japan Asia had Stable Outlooks, while two had Positive Outlooks and four had Negative Outlooks. The majority of the Outlooks were Stable, which lends support to the expectation that the performance of the structured finance transactions in the region will largely be stable in 2010.
Individual press releases relating to specific rating actions can be found on Fitch's website at www.fitchratings.com.
Applicable Criteria available on Fitch's website at www.fitchratings.com: "Global Structured Finance Rating Criteria", dated 30 September 2009.
Contact: Alex Choi, Hong Kong, +852 2263 9936; Helen Wong, +852 2263 9934; Alison Ho, +852 2263 9937
Media Relations: Karen Cho, Hong Kong, Tel: +852 2263 9935, Email:
[email protected]; Shivani Sundralingam, Singapore, Tel: + 65 6796 7215, Email:
[email protected].