Related Market Sector:
Fitch Ratings-Taipei/Hong Kong/Singapore-18 January 2010: Fitch Ratings has today commented on the lack of issuance activity in Taiwan’s domestic structured credit market in 2009 and said it expects the quiet domestic structured credit market to continue with limited origination and investment activity in the short-run.
“Given the excess liquidity within the island’s financial system, together with stagnant loan growth and low corporate impairment losses, there have been limited incentives for local financial originators to securitise their existing credit books. In particular, under Taiwan’s interpretation of Basel II, securitization of corporate loan portfolios is not an effective approach to managing banking capital efficiency,” said Jackie Lee, Director in Fitch’s Structured Credit team.
“From the investment community’s perspective, the losses suffered by Taiwan’s major financial institutions from their investments in global synthetic collateral debt obligations and US subprime-related securities made before 2008 have significantly curbed their appetite for complex credit instruments. At this moment, they are completely averse to instruments involving foreign structured exposures but have generally retained their appetite for domestic corporate structured credit paper,” added April Chen, Associate Director in Fitch’s Structured Credit team.
In 2009, Fitch affirmed all ratings of the notes issued by the existing six domestic securities-backed ABCP programmes and two CBO term deals. The liabilities of the existing transactions will continue to amortise as the underlying securities become due over time. The credit prospects for the underlying assets in these transactions are expected to be stable in the coming year.
In the commentary entitled "Slow Structured Credit Activity Continues", the agency examined relevant reasons that have dampened this once expanding domestic structured credit market. The commentary is available at ‘www.fitchresearch.com’ and ‘www.fitchratings.com.tw’
Contacts: Jackie Lee, +886 2 8175 7613/
jackie.lee@fitchratings.com; April Chen, +886 2 8175 7614/
april.chen@fitchratings.com; David Wong, +852 2263 9927/
david.wong@fitchratings.com.
Additional information is available at www.fitchratings.com.
