The FINANCIAL — Sydney/Hong Kong-18 July 2011: Fitch Ratings has said today that the ratings of structured finance (SF) tranches backed by assets in Asia-Pacific (APAC) were largely stable in Q211, although there are specific sectors where the Outlook is Negative.
"The Outlook for certain Japanese CMBS remains Negative at this time, although an increased proportion of this sector is now on Stable Outlook as Fitch has downgraded many tranches to levels considered commensurate with the outstanding risks," said Alison Ho, Senior Director in Fitch's Structured Finance team and head of APAC SF Performance Analytics. "As the time to legal final maturity approaches, the possibility of some property sales being completed in time to redeem the outstanding notes diminishes."
Over 50 Australian RMBS are currently on Rating Watch Negative (RWN), pending the publication of Fitch's criteria on the credit given to lender's mortgage insurance in RMBS. This is expected to be published shortly. Fitch will review all tranches on RWN within six months of publishing the final criteria.
Over 80 Australian/New Zealand tranches were affirmed during Q211 as a result of steady asset performance and two ABS tranches were upgraded.
In Japan, all rating actions during Q211 were on CMBS transactions where a total of 22 tranches were downgraded, three were placed on RWN, three were upgraded and a further 22 were affirmed. The downgrades resulted from the impact of the remaining time to maturity on the likelihood of full principal repayment, interest deferrals and downwards revisions to commercial property values.
In Non-Japan Asia, one Taiwanese CMBS transaction remains on Negative Outlook. Elsewhere in the region ratings are expected to remain stable.
The performance of Indian SF continues to be stable, with over 20 tranches affirmed during Q211.
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