The FINANCIAL — Hong Kong-18 July 2011: Fitch Ratings said that affirmations continued to dominate the rating actions of non-Japan Asia structured finance (SF) transactions in Q211.
Positively, the region also experienced one upgrade and no downgrades.
The affirmations of 10 tranches from four publicly rated South Korean RMBS transactions reflected the stable portfolio performance and increased seasoning. The build-up of credit enhancement (CE) as the portfolios amortised also resulted in one tranche from one of these transactions being upgraded to 'AAAsf'. All 11 tranches from these RMBS transactions are currently rated at 'AAAsf' with Stable Outlook. The continuing de-leveraging of these transactions and the resulting build-up of CE levels, as well as the generally moderate loan-to-value ratio of the underlying mortgage loans, are expected to support the notes' ratings, despite risks of a property bubble in South Korea.
In the ABS sector, two South Korean credit card transactions were affirmed in Q211 and both transactions are expected to be paid in full within the next 10 months. Two Thai credit card transactions were also affirmed; the Outlook of one of these two transactions was revised to Stable from Negative, following the revision of Thailand's International Local Currency IDR Outlook to Stable from Negative in May 2011, which acts as a cap on the rating of this transaction.
A guarantee letter provided by Citibank N.A. ('A+'/ 'F1+'/ Rating Watch Negative) was executed in May 2011 to guarantee Citibank Korea Inc.'s ('A'/ 'F1'/ Rating Watch Negative) exposure in three publicly rated South Korea structured finance transactions. This restored the rating eligibility of the account bank, in line with Fitch's updated counterparty criteria, dated 14 March 2011.
The Outlook for the region remains largely Stable, with just three tranches from one Taiwanese CMBS transaction on Negative Outlook.