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					Ratings Roundup Report: Creditworthiness Has Stabilized But The
Unsettled Economy Remains A Key Risk Factor In 2011


                                                                                              2010/12/30
 Primary Credit Analyst:       Raymond Hsu, CFA; (886) 2 8722-5827, raymond_hsu@taiwanratings.com.tw
                               Susan Chu, (886) 2 8722-5813, susan_chu@taiwanratings.com.tw
                               Daniel Hsiao, (886) 2 8722-5826, daniel_hsiao@taiwanratings.com.tw
                               Andy Chang, CFA; (886) 2 8722-5815, andy_chang@taiwanratings.com.tw
                               Aaron Lei, (886) 2 8722-5852, aaron_lei@taiwanratings.com.tw

Taiwan's corporate and financial sectors strengthened their operating performance much
faster than our expectation, due mostly to strong export restoration under the stabilizing
global economy as well as greater stability in the domestic financial market. Accordingly, the
creditworthiness of Taiwan Ratings' rated population stabilized over the past few quarters,
evidenced by the higher number of rating upgrades to downgrades as well as the number of
upward outlook revisions over the past 12 months that returned most negative rating
outlooks back to stable (see chart 1, chart 2, table 1 and table 2). However, we expect a
moderate degree of ratings volatility to remain across our rated pool in view of the still
bumpy global economic recovery and the highly competitive operating environment in
Taiwan.




In Taiwan's corporate and financial sectors, the total number of issuer rating upgrades
exceeded downgrades in 2010 for the first time in three years, due mostly to stabilizing
macroeconomic conditions, with eight upgrades against four downgrades (see table 1).
Despite the improvement, the recovery in the credit profiles of the corporate and financial
sectors came only gradually over the past 12 months, compared with a more condensed 27




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             downgrades in 2009. Unlike the developments that year, Taiwan's financial sector and the
             corporate sector improved at a similar pace in 2010, with both sectors each experiencing
             single-digit upgrades and downgrades. The structured finance market also experienced
             similar improvement in 2010 with ten upgrades against four downgrades in 2010, compared
             with 29 downgrades and 2 upgrades in 2009 (see table 3).
             Taiwan Ratings expects the rating performance of its rated pool in 2011 to continue to
             exhibit a mild degree of improvement, as the global economy continues its uneven pace of
             recovery. Meanwhile, credit provision costs are likely to continue to decline in Taiwan's
             financial markets, and credit spreads stabilize. Nonetheless, further improvement is likely to
             be limited in the near term, particularly for the financial sector, due to significant obstacles
             brought by the competitive environment. Resultantly, as at Dec. 24, 2010, Taiwan Ratings'
             rated pool in the corporate and financial sectors only carried a limited number of positive
             bias--defined as defined as the ratio of entities listed on CreditWatch Positive or with a
             positive outlook to total ratings (see chart 2).




             In our opinion, the corporate sector is likely to experience faster improvement in credit
             quality than the financial sector, as it receives more direct benefits from the recovering
             global economy. In the corporate sector, positive rating actions dominated in 2010, as the
             global recovery in demand for products from petrochemical, transportation, high-tech, and
             automotive sectors significantly improved the profitability and cash flow of those sectors. In
             addition, we expect more positive rating actions in the corporate sector in 2011, given our
             expectation of sustained profitability and cash flow over the next 12 months.

Table 1
Number Of Long-Term Corporate & Government Rating Changes In Taiwan During The Past Five Years
                   2010               2009              2008                 2007               2006
             Upgrade Downgrade Upgrade Downgrade Upgrade Downgrade Upgrade Downgrade Upgrade Downgrade
Corporates      3        2        1        10        1         3        10        3           7      4
Financial       5        2        0        17        4         8        14        15         25      4
institutions
Banks           0        0        0        7         2         4         3        14         12      4
Insurers        0        2        0        4         2         3         3        0           4      0




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Securities         4            0            0             4        0           1           7            0              7   0
companies
Financial
holding            0            0            0             2        0           0           1            0              2   0
companies
Other
financial          1            0            0             0        0           0           0            0              0   0
institutions
Total              8            4            1            27        5           11          24           18           32    8


Table 2
Outlook Revisions On Corporate & Government RatingsOver The Past Five Years
                         2010                  2009                   2008                  2007                   2006
                  Upward Downward Upward Downward Upward Downward Upward Downward Upward Downward
Corporates          10         1           3          3         4            5          3         4           0          1
Financial           19         1          12         19         1          17           7         3           7          5
institutions
Banks*               9         0           5          9         1            8          4         3           3          4
Insurers             3         1           1          3         0            4          2         0           1          1
Securities ¶         3         0           5          3         0            3          0         0           2          0
companies
Financial
holding              3         0           1          4         0            2          1         0           1          0
companies
Other financial      1         0           0          0         0            0          0         0           0          0
institutions
Total               29         2          15         22         5          22           10        7           7          6
*Includes bills finance companies and finance companies. ¶ Includes securities finance companies.
Note: The figures do not include revisions from CreditWatch Positive to Positive or CreditWatch Negative to Negative, or
CreditWatch Developing to Stable.

                  In our view, the local financial sector will maintain its stable credit matrix, benefiting from the
                  stable and benign credit environment. However, we expect the number of upgrades to be
                  limited in 2011, due to the sector's very thin profitability under the very competitive
                  environment. Following a period of generally negative outlook revisions in 2009, we made a
                  high number of upward outlook revisions in the financial sector in 2010. These revisions
                  were mostly from to stable from negative as a result of the stabilizing domestic capital
                  market, lower credit losses and the moderate pace of gradual upward interest rate
                  movement in Taiwan. Upgrades in the financial sector also exceeded downgrades in 2010,
                  following a significant number of downgrades in 2009. However, the improvement in the
                  credit profiles of rated financial entities remained tepid and most of the upgrades we made
                  were to reflect the impact of merger and acquisition activity, or the improved credit factors of
                  parent companies instead of a substantial enhancement in the rated entities' stand alone
                  credit profiles.
                  In the structured finance sector, we expect to see at least stability if not further improvement
                  in 2011, following a somewhat calm year in 2010 when the impact of the global financial
                  market dislocation faded and the sequential pay out of rated notes' underlying assets.
                  Negative ratings actions related to collateralized bond obligation (CBO) transactions with a
                  high exposure to foreign corporate and structured finance debts largely came to an end over
                  the past 12 months along with the stabilizing global financial market. Taiwan Ratings
                  lowered its ratings on 2 tranches, both of them from Industrial Bank of Taiwan CBO 2005-1,
                  and upgraded 10 tranches in one ABS, one CLO, one CBO, and one RMBS transaction in
                  2010.

               Table 3
               Structured Finance New Issue Ratings, Ratings Withdrawals, And Ratings Changes In 2010
               Asset type              New    Withdrawn Upgrade Downgrade Watch Pos Watch Neg
               RMBS                      0         0          3           0          0          0




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ABS                       2            0            1            0            0           0
CBO                       1            9            5            4            0           3
CLO                       0            8            1            0            0           0
Ground lease              0            0            0            0            0           0
REAT (Real estate         0            0            0            0            0           0
asset trust)
Total                     3            17           10           4            0           3
New Issue Ratings, Ratings Withdrawals, And Ratings Changes In 2009
Asset type               New     Withdrawn Upgrade Downgrade Watch Pos Watch Neg
RMBS                      0            2            0            0            0           0
ABS                       0            0            0            0            0           0
CBO                       0            2            0           29            0           38
CLO                       0            5            2            0            0           0
Ground lease              0            0            0            0            0           0
REAT (Real estate         3            0            0            0            0           0
asset trust)
Total                     3            9            2           29            0           38
Note: Numbers for Watch Neg refer to the actions taken to place the ratings on Credit Watch with
negative implications.

   The credit quality of rated fixed-income funds remained stable in 2010, despite the
   disruption to financial markets, partly as a result of the Taiwan government's policy
   measures to fully guarantee the nation's bank deposits, as well as the transformation of
   many funds into quasi-money market funds, which have very high liquidity. However, the
   end of the government's full guarantee on the nation's bank deposits at the end of 2010, in
   our opinion, is likely to cause rated fixed-income funds to tighten up their credit risk policy
   due to heightened credit risk going forward.

   CORPORATE RATINGS
   Positive rating actions outnumbered negative ones
   In 2010, upgrades outnumbered downgrades in the corporate sector for the first time in
   three years. The ratio of downgrades to upgrades narrowed to 0.67x for the past year, down
   from 10x in 2009. In the corporate sector, Taiwan Ratings raised the ratings on three credits
   and lowered the ratings on two:
   On May 18, 2010, we raised our issue rating on Taiwan High Speed Rail Corp.'s (THSRC)
   US$300 million unsecured convertible bond due May 2012 based on the company's
   improved liquidity. The rating action reflects our expectation that THSRC's improved liquidity
   now that a debt-refinancing plan has been implemented will support the company's ability to
   fulfill its financial obligation on the convertible bond.
   On Aug. 24, 2010, we raised our long-term corporate credit rating on Taiwan-based J Touch
   Corp. The upgrade reflects our view that the full conversion of J Touch's Taiwan dollar (NT$)
   660 million convertible bond, a NT$855 million new equity injection, and recent stabilization
   in J Touch's profitability have strengthened the company's leverage and cash flow protection
   measures.
   On Nov. 26, 2010, we raised our long-term corporate credit rating on Taiwan-based China
   Airlines Ltd. (CAL). The upgrade reflects our view that a recovering economy and growing
   direct flights between China and Taiwan will continue to support CAL's profitability and
   enable the company to further strengthen its leverage and cash flow protection measures,
   despite the risk of rising oil prices in 2011.




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         Table 4
         Corporate Sector Upgrades
         Issuer                                To                             From                     Date
         Taiwan High Speed Rail
         Corp.'s (THSRC) US$300             twB/Stable                twCCC+/Watch Dev            May 18, 2010
         million unsecured convertible
         bond due May 2012 (issue)
         J Touch Corp. (Issuer)          twBB+/Stable/twB              twBB/Positive/twB          Aug. 24, 2010
         China Airlines Ltd. (Issuer)  twBBB+/Stable/twA-3            twBBB/Stable/twA-3          Nov. 26, 2010

               On Feb. 9, 2010, we lowered our corporate credit ratings on Gallop Number One Real
               Estate Investment Trust (Gallop No. 1 REIT). The rating action reflects the REIT's
               weakened profitability due to a lower-than-expected occupancy rate in the trust's CTCI
               Building and Honeywell Information Building. We believe the trust is unlikely to restore its
               profitability to the previous level over the next 12 months.
               On June 22, 2010, we lowered our long-term corporate credit rating on Kee Tai Star Real
               Estate Investment Trust (Kee Tai Star REIT). The downgrade reflects the REIT's further
               weakening profitability due to a 25% rental cut in its renewed lease contract with the City
               Lake Hotel that became effective on Feb. 1, 2010. The rental cut was the second in 13
               months, and follows from a 20% reduction on Jan. 1, 2009, due to the hotel's poor operating
               results.

     Table 5

     Corporate Sector Downgrades

     Issuer                                                     To                    From                       Date

     Gallop Number One Real Estate
                                                         twA-/Stable/twA-2     twA/Negative/twA-1          Feb. 9, 2010
     Investment Trust (issuer)

     Kee Tai Star Real Estate Investment Trust
                                                       twBBB/Stable/twA-3 twBBB+/Negative/twA-3           June 22, 2010
     (issuer)

               The improvement in credit profiles is likely to continue over the next several quarters
               Upward outlook revisions also outpaced downward ones in 2010, as we made upward
               revisions to the outlooks on ten issuers, including three in the transportation sector, four in
               the high tech sector, and one each in the auto finance, petrochemical, and food & beverage
               sectors. We removed the rating on Chi Mei Optoelectronics Corp. from CreditWatch with
               positive implications due to our view that the synergy associated with the company's merger
               with Innolux Corp. and TPO Displays Corp. will not materialize as soon as we had
               previously expected. As at Dec. 25, 2010, five ratings or 11.1% of our rated pool in the
               corporate sector carry positive outlooks with no negative outlooks.

Table 6
Corporate Sector Outlook Revisions
Issuer                                                          To                         From                         Date
Taiwan High Speed Rail Corp.'s (THSRC)
US$300 million unsecured convertible bond               twCCC+/WatchDev              twCCC+/WatchNeg               Jan. 11, 2010
due May 2012 (issue)
Nanya Technology Corp. (Issuer)                        twBBB+/Stable/twA-3       twBBB+/Negative/twA-3             Jan. 27, 2010
Inotera Memories Inc. (Issuer)                         twBBB+/Stable/twA-3       twBBB+/Negative/twA-3             Jan. 27, 2010
Chi Mei Optoelectronics Corp. (Issuer)                twBBB+/Positive/twA-2     twBBB+/Watch Pos/twA-2            March 18, 2010
Taiwan Acceptance Corp. (Issuer)                        twA/Positive/twA-1           twA/Stable/twA-1              May 13, 2010
Yang Ming Marine Transport Corp. (Issuer)              twBBB+/Stable/twA-3       twBBB+/Negative/twA-3             June 1, 2010
Wan Hai Lines Ltd. (Issuer)                              twA-/Stable/twA-2         twA-/Negative/twA-2             June 1, 2010




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Chimei Corp. (Issuer)                                    twA/Stable/twA-1        twA/Negative/twA-1             June 17, 2010
Unimicron Technology Corp. (Issuer)                     twA/Positive/twA-1         twA/Stable/twA-1              July 8, 2010
Uni-President Enterprises Corp. (Issuer)               twA+/Positive/twA-1        twA+/Stable/twA-1             Sept. 3, 2010
Cathay Real Estate Development Co. Ltd.                 twA-/Stable/twA-2        twA-/Positive/twA-2            Nov. 25, 2010
(Issuer)
Qisda Corp. (Issuer)                                   twBB+/Positive/twB         twBB+/Stable/twB              Dec. 15, 2010

              Three new issuer credit ratings assigned
              Taiwan Ratings assigned three new issuer credit ratings in 2010, including Chimei Innolux
              Corp., the post-merger entity resulting from the merger of Innolux Display Corp., Chi Mei
              Corp. and TPO Displays Corp. The other new issuer ratings were on USI Corp.--a major
              petrochemical group in Taiwan--and Dragon Steel Corp., which is a wholly owned subsidiary
              of China Steel Corp. (twAA+/Stable/twA-1). Our ratings on Dragon Steel Corp. reflect the
              high likelihood that China Steel will provide necessary support to maintain Dragon Steel's
              financial viability due to Dragon Steel's strategic role in China Steel's future growth plans
              and its increasing integration with China Steel's operations.

      Table 7
      Corporate Sector New Issuer Ratings
      Issuer                                                          Rating                          Date
      Chimei Innolux Corp. (Issuer)                           twBBB+/Positive/twA-2              March 18, 2010
      Dragon Steel Corp. (Issuer)                               twAA/Stable/twA-1+                Oct. 20, 2010
      USI Corp. (Issuer)                                         twA-/Stable/twA-2                Dec. 1, 2010

              Ratings withdrawn on four issuers
              Taiwan Ratings withdrew its ratings on three issuers at the request of the companies. The
              withdrawal of the ratings on Chi Mei Optoelectronics Corp. was a result of its merger with
              Innolux Display Corp.

           Table 8

           Corporate Sector Ratings Withdrawn

           Issuer                                             Rating prior to withdrawal          Date

           Chi Mei Optoelectronics Corp. (Issuer)                twBBB+/Positive/twA-2      March 18, 2010

           Huga Optotech Inc. (Issuer)                            twBBB-/Stable/twA-3       March 30, 2010

           J Touch Corp. (Issuer)                                  twBB+/Stable/twB          Aug. 24, 2010

           Cathay Real Estate Development Co. Ltd.
                                                                   twA-/Stable/twA-2         Nov. 25, 2010
           (Issuer)

              FINANCIAL SERVICE RATINGS
              Credit profiles stabilized amid rising interest rates, lower credit charges, and a stable
              capital market
              Taiwan's financial institutions, including banks, insurers, securities companies, and financial
              holding companies experienced positive credit evolution in terms of ratings and outlook
              changes in 2010, under the stabilizing domestic and global financial markets. However, the
              improvement in the credit profiles of Taiwanese financial institutions was still tepid in 2010
              and the upgrades were mostly driven by merger and acquisition activity or the improved
              credit factors of the rated entities' parents who provide them with implicit support. There
              were five upgrades compared with two downgrades in 2010.
              On March 1, 2010, we raised our long-term and short-term counterparty credit ratings on
              EnTie Securities Finance Co. Ltd. (EnTie SFC). The rating action brings the ratings on




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              EnTie SFC into line with those on Capital Securities Co. Ltd. (twA/Stable/twA-1), which
              acquired the company in 2010.
              On June 23, 2010, we raised our long-term and short-term counterparty credit rating on
              Capital Securities Co. Ltd. The rating actions mainly reflect our view that Capital Securities
              has strengthened its capitalization and demonstrated a good track record of risk
              management over recent quarters. We expect these efforts to help the company solidify its
              business position and competitiveness in Taiwan's highly competitive securities market.
              On Aug. 13, 2010, we raised our long-term and short-term counterparty credit ratings on
              Union Bills Finance Co. Ltd. The rating action brings the ratings on Union BFC in line with
              those on Union Bank of Taiwan (UBOT; twA-/Negative/twA-2), to reflect the bills finance
              company's merger with UBOT on Aug. 15, 2010.
              On Dec. 17, 2010, we raised the ratings on Citibank Securities (Taiwan) Ltd. and Citigroup
              Global Market Taiwan Securities--reflecting the upgrade of the stand alone credit profile of
              their respective parents--due to the core status of these two Taiwanese subsidiaries.

Table 9
Financial Institutions Upgrades
Issuer                                                         To                    From                       Date
EnTie Securities Finance Co. Ltd. (Issuer)             twA-/Positive/twA-2   twBBB-/Positive/twA-3          March 1, 2010
Capital Securities Co. Ltd. (Issuer)                    twA/Stable/twA-1       twA-/Positive/twA-2          June 23, 2010
Union Bills Finance Co. Ltd. (Issuer)                 twA-/Negative/twA-2    twBBB+/Positive/twA-3          Aug. 16, 2010
Citibank Securities (Taiwan) Ltd. (Issuer)             twAA/Stable/twA-1+      twAA-/Stable/twA-1           Dec. 17, 2010
Citigroup Global Markets Taiwan Securities            twAA-/Stable/twA-1+       twA+/Stable/twA-1           Dec. 17, 2010

              On April 20, 2010, we lowered our insurer financial strength and counterparty credit ratings
              on Metlife Taiwan Insurance Co. Ltd. The rating action reflects our view that Metlife
              Taiwan's business risk profile and financial flexibility face higher risks following the
              announcement by U.S.-based Metlife Inc. (rated A-/ Negative/A-2 by Standard & Poor's
              Ratings Services) that it has reached an agreement to sell Metlife Taiwan to Taiwan-based
              Waterland Financial Holding Co. Ltd. (not rated). However, Taiwan's regulator later rejected
              the transaction.
              On Oct. 22, 2010, we lowered our insurer financial strength rating and counterparty credit
              rating on Fubon Insurance Co. Ltd. The downgrade reflects our expectation that the
              company's obligation to support other weaker group members and to share resources will
              grow over the next two to three years. In addition, integration between the insurer and the
              parent group has increased in terms of operation control, investment strategy, market risk
              management, and cross selling. We believe that as a core entity of the Fubon Financial
              Holding Co. Ltd. (insert ratings) group, Fubon Insurance will continue to follow the group's
              strategic direction to strengthen integration amongst group members.

Table 10
Financial Institutions Downgrades
Issuer                                                       To                    From                          Date
MetLife Taiwan Insurance Co. Ltd. (Issuer)             twA/Watch Neg/--      twAA-/Watch Neg/--             April 20, 2010
Fubon Insurance Co. Ltd. (Issuer)                       twAA+/Stable/--       twAAA/Negative/--             Oct. 22, 2010

              The outlook on most rated financial institutions is stable
              Outlook revisions in 2010 were mostly upward and this mainly reflects our view that a
              continued economic recovery will bring a more stable operating environment for the island's
              financial sector. In addition, we observed financial institutions' declining credit provision
              costs over the past 12 months, due in most part to Taiwan's general economic recovery as
              well as the Taiwan government's corporate loan restructuring scheme that began in late
              2008. We made 19 upward outlook revisions in 2010, on nine banks, three each on
              securities firms, insurance, and financial holding companies, and on one leasing company.
              However, we believe that rapid credit improvement in Taiwan's financial sector is not on the
              horizon, due to still-low interest rates and credit spreads under a very competitive




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              environment (see chart 3). Notably, the upward outlook revisions in 2010 were mainly to
              bring the originally negative outlooks back to stable, rather than indicating a strong
              likelihood of significant improvement in the rated entities' credit profiles. As at Dec. 25, 2010,
              only two ratings or just 2.5% in Taiwan Ratings' rating population in the financial sector
              carried positive outlooks, compared with two negative outlooks. The positive outlook on
              Sunny Bank reflects our view that the bank is likely to maintain its current core earning
              power with manageable credit costs over the coming 12 months. The positive outlook on
              Tokio Marine Newa Insurance reflects our expectation that the insurer's overall credit profile
              could improve over the coming one to two years, following the recent improvement in its
              competitive position.




              By contrast, the negative outlook on Union Bank of Taiwan reflects our continued concern
              on the bank's capacity to restore a satisfactory core earnings profile commensurate with its
              current ratings in the next one to two years. Also the negative outlook on Chartis Taiwan
              Insurance reflects the outlook direction of the AIG group, as the ratings on Chartis Taiwan
              have in the past moved in tandem with the ratings on the AIG group's property/casualty
              companies, given the insurer's strategic importance to the group.

Table 11
Financial Institutions Outlook Revisions
Issuer                                                               To                      From         Released date
Taiwan Life Insurance Co. Ltd. (Issuer)                         twA+/Stable/--          twA+/Negative/--   Jan 22, 2010
MetLife Taiwan Insurance Co. Ltd. (Issuer)                  twAA-/Watch Neg/--           twAA-/Stable/--   Feb. 4, 2010
Chinatrust Financial Holding Co. Ltd.                      twAA-/Stable/twA-1+    twAA-/Watch Neg/twA-1+ Feb. 5, 2010
Chinatrust Commercial Bank                                  twAA/Stable/twA-1+     twAA/Watch Neg/twA-1+   Feb. 5, 2010
Industrial Bank of Taiwan (Issuer)                            twA/Stable/twA-1        twA/Negative/twA-1  March 8, 2010
Polaris Securities Co. Ltd. (Issuer)                          twA/Stable/twA-1        twA/Negative/twA-1  April 29, 2010
Bank of Panhsin (Issuer)                                   twBBB-/Stable/twA-3      twBBB-/Negative/twA-3 June 23, 2010
Standard Chartered Bank (Taiwan) Ltd. (Issuer)             twAA+/Stable/twA-1+      twAA+/Negative/twA-1+ June 23, 2010
EnTie Commercial Bank (Issuer)                            twBBB+/Positive/twA-2      twBBB+/Stable/twA-2   July 19, 2010
Bank SinoPac (Issuer)                                        twA+/Stable/twA-1       twA+/Negative/twA-1   July 28, 2010
SinoPac Securities Corp. (Issuer)                            twA+/Stable/twA-1       twA+/Negative/twA-1   July 28, 2010
SinoPac Holdings (Issuer)                                     twA/Stable/twA-1        twA/Negative/twA-1   July 28, 2010
Chailease Finance Co. Ltd. (Issuer)                           twA/Stable/twA-2        twA/Negative/twA-2  Aug. 19, 2010




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Sunny Bank Ltd. (Issuer)                                 twBBB/Positive/twA-3      twBBB/Stable/twA-3          Sept. 13, 2010
Cosmos Bank, Taiwan (Issuer)                              twBBB-/Stable/twA-3    twBBB-/Negative/twA-3         Sept. 21, 2010
MetLife Taiwan Insurance Co. Ltd. (Issuer)                  twA/Watch Dev/--        twA/Watch Neg/--           Oct. 11, 2010
China Development Financial Holding Corp.                 twAA-/Stable/twA-1+    twAA-/Negative/twA-1+         Nov. 1, 2010
(Issuer)
Grand Cathay Securities Co. Ltd. (Issuer)                 twAA/Stable/twA-1+      twAA/Negative/twA-1+         Nov. 1, 2010
China Development Industrial Bank (Issuer)                twAA/Stable/twA-1+      twAA/Negative/twA-1+         Nov. 1, 2010
Tokio Marine Newa Insurance Co. Ltd. (Issuer)               twAA/Positive/--         twAA/Stable/--            Dec. 13, 2010

              Two new issuer ratings assigned and five withdrawals
              Taiwan Ratings assigned two new ratings and withdrew five existing ratings on financial
              institutions in 2010. The new ratings were assigned to HSBC Bank (Taiwan) Ltd. and E.SUN
              Financial Holding Co. Ltd.

              Table 12
              Financial Institutions New Issuer Ratings
              Issuer                                      Ratings assigned                    Date
              HSBC Bank (Taiwan) Ltd. (Issuer)          twAAA/Stable/twA-1+               April 1, 2010
              E.SUN Financial Holding Co. Ltd. (Issuer)   twA/Stable/twA-1               June 30, 2010

              The rating withdrawals on EnTie Commercial Bank, Fubon Securities Finance Co. Ltd., and
              First-Aviva Life Insurance Co. Ltd., were at the request of the issuers. The rating
              withdrawals on Union Bills Finance Co. Ltd. and EnTie Securities Finance Co. Ltd. were
              made following their mergers with Union Bank of Taiwan on Aug. 16, 2010 and EnTie
              Commercial Bank on March 1, 2010, respectively.

     Table 13
     Financial Institutions Sector Ratings Withdrawn
     Issuer                                          Rating prior to withdrawal                      Date
     EnTie Securities Finance Co. Ltd. (Issuer)           twA-/Positive/twA-2                    March 1, 2010
     EnTie Commercial Bank (Issuer)                    twBBB+/Positive/twA-2                     July 19, 2010
     Union Bills Finance Co. Ltd. (Issuer)               twA-/Negative/twA-2                     Aug. 16, 2010
     Fubon Securities Finance Co. Ltd. (Issuer)         twBBB+/Stable/twA-2                      Sept. 20, 2010
     First-Aviva Life Insurance Co. Ltd. (Issuer)           twA+/Stable/--                        Oct. 8, 2010

              As of Dec. 25, 2010, the rating on one financial institution remained on CreditWatch with
              developing implications--MetLife Taiwan Insurance Co. Ltd.--due to our concern over the
              insurer's credit profile as a result of a potential shareholder change, which we believe could
              affect the company's business and financial profiles.
       Table 14
       Financial Institutions Sector Ratings On CreditWatch
       Issuer                                                         RatingonCreditWatch               Date
       MetLife Taiwan Insurance Co. Ltd. (Issuer)                       twA/Watch Dev/--            Oct. 11, 2010

              STRUCTURED FINANCE RATINGS
              The impact of global financial market dislocation on securities ratings slowly faded in
              2010
              The deterioration of structured finance securities largely came to an end in 2010, with
              upgrades and affirmations on Taiwan structured finance transactions outnumbering
              downgrades this year, compared with understatedly negative rating action in 2009. In
              addition, the stabilizing domestic financial market and recovering local economy support our
              expectation for the continued performance of rated transaction assets over the coming few
              quarters, and the gradual return of momentum in the domestic structured finance market
              next year. In 2010, the four downgrades we made were all on the Class A and B notes
              issued by Industrial Bank of Taiwan Collateralized Bond Obligation 2005-1 (IBT CBO
              2005-1), which was affected by the deterioration of underlying synthetic collateralized debt
              obligations (SCDO) linked to foreign corporations.




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              Taiwan Ratings
                        A Standard & Poor’s Ratings Partner
     Domestic collateralized loan obligation (CLO), residential mortgage-backed securities
     (RMBS), real estate asset trust (REAT), asset-backed securities (ABS), and some
     collateralized bond obligation (CBO) transactions maintained their stable performance and
     resultantly stable or upward ratings movement in 2010. Despite the stabilizing performance
     of structured finance products, it appears that investors previously hurt in their structured
     finance positions are not ready to participate in new offerings soon, and the market
     remained inactive throughout 2010 with only one ABS transaction closed.

     Ratings assignment
          On March 15, 2010, we assigned our ratings to the Class B certificates issued by
            Jih Sun Securities Co. Ltd. 2007-1 Collateralized Bond Obligation Special Purpose
            Trust. The transaction is backed by a number of Taiwan dollar (NT$) denominated
            bonds and USD denominated credit-linked notes. The transaction was closed on
            July 10, 2007.
          On Aug. 13, 2010, we assigned our ratings to the Class A and Class B certificates
            of a lease and installment backed securitization transaction originated by Chailease
            Finance Co. Ltd. (twA/Stable/twA-2).

     Table 15
     Structured Finance Ratings Assignment In 2010
     Class of certificate                         Transaction                     Date
     Class B                         Jih Sun Securities Co. Ltd. 2007-1 CBO March 15, 2010
     Class A And B                   Chailease 2010 Securitization Special  Aug. 13, 2010
                                     Purpose Trust

     Ratings upgrades resumed pace over the past 12 months
     Ratings upgrades increased in 2010, and Taiwan's stabilizing economy and asset
     performance is likely to support further credit improvement over the next few quarters, in our
     view. The upgrades involved all sectors, including CLO, ABS, CBO, and RMBS transactions.
     These transactions have benefitted from the steady repayment of assets that contributed to
     the quick accumulation of credit enhancement, as well as to positive creditworthiness
     migration in the underlying portfolios.
              On March 17, 2010, we raised our rating on the Class 4 senior beneficial certificates
               issued by Industrial Bank of Taiwan Corporate Loan Securitization Special Purpose
               Trust 2006-1 (IBT CLO 2006-1). The rating action reflects the certificates' increased
               credit enhancement level against the credit risk they are exposed to.
              On July 14, 2010, we raised our ratings on the Class A-1, A-2, B, and C notes
               issued by Polaris Securities Co. Ltd. and Bank of Overseas Chinese Corporate
               Bond Securitization Special Purpose Trust 2006-1 (Polaris Sec. & BOOC CBO
               2006-1). The rating actions reflect the portfolio's improved credit quality due to the
               positive rating migration in the reference portfolio of the transaction's underlying
               USD SCDO.
              On Sept. 15, 2010, we raised our ratings on the Class C notes issued by Capital
               Securities Corp. Collateralized Bond Obligation 2006-1 (Capital Securities CBO
               2006-1). The rating action reflects the stable performance of the transaction's
               underlying portfolio and the improvement on the underlying pool's credit profile due
               to the repayment of underlying Taiwan dollar denominated bonds.
              On Nov. 12, 2010, we raised our ratings on the Class B notes issued by Chailease
               2007 Securitization Special Purpose Trust (Chailease ABS 2007-1). The rating
               upgrades reflect the increased coverage on the expected collateral credit loss for
               the rated notes. This coverage improvement is a result of the increased credit
               enhancement level versus the stable performance of underlying receivables and the
               realized recovery on defaulted receivables.
              On Dec. 17, 2010, we raised our ratings on the Class B, C, and D notes issued by
               Chinatrust Commercial Bank RMBS 2004-A Special Purpose Trust (CTCB RMBS
               2004-A). The rating upgrades reflect the increased credit enhancement levels for
               the rated notes under respective rating scenarios, which are attributed to the
               sequential repayment of issued notes and improved mortgage pool characteristics.
Table 16




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      Taiwan Ratings
                 A Standard & Poor’s Ratings Partner
Structured Finance Ratings Upgrades In 2010
Class of certificate                                              Transaction                       Date
Class 4                                                IBT CLO 2006-1                         March 17, 2010
Class A-1, A-2, B, and C                               Polaris Sec. & BOOC CBO 2006-1         July 14, 2010
Class C                                                Capital Securities CBO 2006-1          Sept. 15, 2010
Class B                                                Chailease ABS 2007-1                   Nov. 12, 2010
Class B, C, and D                                      CTCB RMBS 2004-A                       Dec. 17, 2010

     Downgrades on CBO transactions decreased substantially
     Taiwan Ratings took two downgrade actions on the same tranches of Industrial Bank of
     Taiwan Collateralized Bond Obligation 2005-1 (IBT CBO 2005-1) between the start of 2010
     and Dec. 25, 2010. The transaction was collateralized by an offshore SCDO, and our rating
     action was related to the negative evolution of the underlying assets' credit quality.
            On April 28, we lowered our ratings on the Class A and B notes issued by Industrial
             Bank of Taiwan Collateralized Bond Obligation 2005-1 (IBT CBO 2005-1). The
             rating action reflects the impact of specific credit events on certain reference entities
             in the two underlying US dollar SCDO assets of the transaction.
            On Sept. 27, 2010, we subsequently downgraded the abovementioned securities to
             'D (sf)' due to the failure of the IBT CBO 2005-1 to make full interest payment to the
             Class A and B notes according to their stated coupons in the issuing documents.

Table 17
Structured Finance Ratings Downgrades In 2010
Class of certificate                                            Transaction                         Date
Class A And B                                          IBT CBO 2005-1                          April 28, 2010
Class A And B                                          IBT CBO 2005-1                          Sept. 27, 2010

     Ratings on CreditWatch
     As of Dec. 25 2010, no structured finance ratings were on CreditWatch.

     FIXED-INCOME FUND RATINGS
     Credit risk will rise following the expiration of the government's full guarantee on
     bank deposits
     In our view, rated domestic fixed-income funds have demonstrated stable credit quality after
     the funds transformed into quasi-money market funds in 2007--such funds tend to maintain
     very high liquidity and generally strong portfolio credit quality. The government's continued
     full guarantee on bank deposits has also somehow protected fixed-income funds from credit
     losses in 2009-2010. In addition, the transformation of rated funds into money market funds
     at the end of 2010 will further shorten the duration and strengthen the liquidity of the funds,
     in our view. However, we expect some rated funds to adjust their portfolio to protect them
     from rising credit risk after the expiration of the government's full guarantee on bank
     deposits at the end of 2010. Taiwan Ratings added no new ratings in 2010 but withdrew two
     ratings at the funds' requests during the same period.

Table 18
Fixed-Income Fund Sector Ratings Withdrawn
Fund                                                  Rating prior to withdrawal                  Date
Paradigm Safe Bond Fund                                         twAA-f                        Sept. 21, 2010
Mega Diamond Bond Fund                                           twAAf                        Dec. 10, 2010

     DEFAULT EXPERIENCE IN THE CORPORATE, FINANCIAL, AND
     STRUCTURED FINANCE SECTORS
     Defaults are likely to remain rare in the corporate and financial sectors in 2011
     Our rated pool in the corporate and financial sector continued to record no defaults in 2010,
     the same as in 2009, reflecting generally stabilizing creditworthiness, the effect of our small
     ratings pool, the Taiwan government's efforts in maintaining the stability of the domestic
     financial system, and the adequate access of non-financial corporations to liquidity. In




                                                                        http://www.taiwanratings.com   11
      Taiwan Ratings
               A Standard & Poor’s Ratings Partner
      addition, we expect that defaults in the corporate and financial sectors will remain relatively
      rare in 2011, given the improving market conditions and stable financial markets.

      Defaults of structured finance ratings may decline in 2011
      Our rating pool in the structured finance sector experienced two defaults in 2010--the Class
      A and B notes issued by Industrial Bank of Taiwan Collateralized Bond Obligation 2005-1
      (IBT CBO 2005-1). In 2009, the Class C and D notes issued by IBT CBO 2005-1 defaulted.
      These four are the only defaults among the 90 ratings that Taiwan Ratings has assigned to
      structured finance instruments since 2003. We expect that defaults in 2011 may decline
      further given our expectation that transaction asset performance will remain largely
      unchanged as the impact of recent global financial dislocation continues to fade.

Table 19
Structured Finance Ratings Defaults In 2010
Class of certificate                                               Transaction                         Date
Class A And B                                             IBT CBO 2005-1                           Sept. 27, 2010

      2011 TO BE CHARACTERIZED BY CAUTIOUS OPTIMISM DESPITE THE
      POTENTIAL FOR FURTHER RATINGS VOLATILITY
      We are cautiously optimistic about the credit evolution of Taiwan Ratings' rated population,
      including the corporate, financial and structured finance ratings in 2011, in view of the
      recovering, albeit still unsettled, global and domestic economies, as well as the stabilizing
      financial markets. Our currently moderate positive rating bias in the corporate and financial
      sectors, suggests the possibility of more positive than negative rating actions in the coming
      year. In addition, we expect the continuation of the current transaction asset performance to
      enhance the rating performance of Taiwan Ratings' structure finance rating pool over the
      next few quarters.
      However, we believe that any improvement, particularly in the financial sector, will not be
      speedy due to significant obstacles in the operating environment, including thin credit
      spread, a low interest rate, and very intense competition. We also believe that some
      adverse developments such as rising production costs in China, the appreciation of the
      Taiwan dollar, and volatile commodity prices may continue to cause volatility in the
      operating performance and therefore the credit quality of the corporate sector in Taiwan
      Ratings' rated population. In addition, with their asset performance highly correlated to the
      performance of the corporate and financial sectors, structured finance and fixed-income
      fund ratings are mostly likely to face continuing volatility, albeit to a lesser extent, in our view.
      _____________________________________________________________
      Note: Ratings stated are correct as of Dec. 24, 2010.




                                                                            http://www.taiwanratings.com   12
      Taiwan Ratings
                 A Standard & Poor’s Ratings Partner
Analytic services provided by Taiwan Ratings Corporation (TRC) are the result of separate activities
designed to preserve the independence and objectivity of ratings opinions. The credit ratings and
observations contained herein are solely statements of opinion and not statements of fact or
recommendations to purchase, hold, or sell any securities or make any other investment decisions.
Accordingly, any user of the information contained herein should not rely on any credit rating or
other opinion contained herein in making any investment decision. Ratings are based on information
received by TRC. TRC has established policies and procedures to maintain the confidentiality of
non-public information received during the ratings process.




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Taiwan Ratings
           A Standard & Poor’s Ratings Partner

				
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