Bangkok--14 Jun--Standard & Poor's
Standard & Poor's Ratings Services said today that it has revised its outlook on the long-term credit ratings on Taiwan to stable from negative. At the same time, we affirmed the 'AA-' long-term and 'A-1+' short-term ratings on Taiwan.
"The revision in outlook reflects our expectations that the Taiwanese economy will build on its strong rebound from the recent slowdown to achieve sustained growth at close to a trend annual rate of 4%," said KimEng Tan, credit analysts with Standard & Poor's. "We believe that this will help to stabilize Taiwan's public finances by gradually bringing down the general government fiscal deficit."
Taiwan's strong external balance sheet, dynamic private sector, and abundant domestic liquidity to fund government deficits through domestic channels support the ratings. These strengths are tempered by a high government debt burden and structural deficits compared with similarly rated peers, as well as a fragmented banking system that is weakened by excessive competition.
"The stable outlook reflects our expectation that sustained growth will contribute to the stabilization of the government's fiscal position in the coming three-to-five years," said Mr. Tan. "We could lower the rating if structural deficits widen due to tax changes and rising public-sector liabilities or significant contingent risks that arise from the banking sector require government intervention. We could raise the rating if the government is able to implement changes to bring down its budgetary and off-budget shortfalls down in a sustainable way. This scenario is likely if structural reforms lift economic growth sufficiently for the government to sustainably lower off-budget subsidies and raise revenues."
Complete ratings information is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
Media Contact:
David Wargin, New York (1) 212.438.1579,
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Analyst Contacts:
KimEng Tan, Singapore (65) 6239-6350
William Hess, Hong Kong (852) 2533 3595
Key Contacts:
Americas Media Relations: (1) 212-438-6667
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Americas Customer Service: (1) 212-438-7280
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