Bangkok--15 Jun--Fitch Ratings
Link to Fitch Ratings' Report: 2009 Asia-Pacific Structured Finance Transition and Default Study and H210 Performance Outlook
Fitch Ratings says today that downgrades of Asia-Pacific structured finance (SF) tranches tripled in 2009, while upgrades during the year also tripled.
"There was a small improvement in the upgrade to downgrade ratio for Fitch-rated bonds in Asia-Pacific in 2009, which rose to 0.30:1 from 0.27:1. Currently, nearly half are rated 'AAA' and carry a Stable Outlook," said Alison Ho, Senior Director and Head of Asia Pacific Performance Analytics. "As a result, there is limited scope for an improvement in the upgrade to downgrade ratio."
The overall stability and impairment rates for Fitch-rated Asia-Pacific structured finance transactions compare favourably with those reported globally - 82% of investment grade tranches were either affirmed or upgraded, with nearly 95% of all 'AAA' ratings affirmed. Impaired bonds and defaults accounted for 1.6% of bonds, compared with 25% globally, reflecting the relatively stable performance of the structured finance market in Asia-Pacific overall.
Japanese CMBS again dominated downgrades in the region, as the commercial property and finance markets in Japan deteriorated, and as Fitch implemented its updated Japanese surveillance criteria in September 2009. This sub-sector contributed to the 37% of all Fitch-rated Asia-Pacific CMBS investment grade tranches that were downgraded during the course of the year. Non-conforming RMBS from Australia and New Zealand also experienced downgrades, although these were limited to the lower-rated tranches, contributing to 100% of all investment grade RMBS tranches being affirmed across Asia-Pacific; this sector was the most stable asset class during 2009.
Upgrades resulted from increased credit enhancement, as transactions repaid sequentially, coupled with strong asset performance in well-seasoned transactions. The prospect for future upgrades remains limited as nearly half of all Fitch-rated Asia-Pacific SF bonds are currently rated 'AAA'.
The troubled Australian ABS transaction Mobius ELR-01 Trust was downgraded further in 2009, with three tranches ending the year rated at 'D'. A single Japanese CMBS tranche (class D from JLOC 38), was also downgraded to 'D' in 2009.
Important exclusions from the 2009 study include CDOs where assets are not predominantly located within Asia-Pacific, and RMBS tranches whose ratings are dependent on the ratings of lenders' mortgage insurance providers.
More details on rating activity in the region over the period 1998 to 2009 by geography and product, as well as a brief summary of rating actions so far in 2010 and the agency's outlook in key areas for the remainder of the year can be found in the report, entitled '2009 Asia-Pacific Structured Finance Transition and Default Study and H210 Performance Outlook', available on the agency's public website www.fitchratings.com.
Contacts: Alison Ho, Hong Kong, +852 2263 9937; Ben McCarthy, Sydney, +612 8256 0388.
Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email:
[email protected] .