RPT-Fitch: APAC SF Ratings and Outlooks Stable in 1Q14

Last Updated: Wed, Apr 16, 2014 07:50 hrs

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April 16 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings says over 97% of the Asia-Pacific structured finance (SF) rating actions in 1Q14 were affirmations, with the remaining rating actions being eight upgrades and two downgrades.

Of the 364 affirmations, 347 were from Australia and New Zealand. Australia contributed all eight of the upgrades during the quarter. Asset performance was supported by the continued strong economic performance in both Australia and New Zealand. The upgrades were made to auto loan ABS, prime RMBS and non-conforming RMBS, where a build-up of credit enhancement supports the higher ratings.

Both downgrades were to a Japanese CMBS transaction where Fitch downgraded two tranches to 'Dsf' from 'CCsf' and 'Csf' following principal loss in the remaining defaulted loans. The ratings have been withdrawn. The other rating actions that Fitch took in Japan were 11 affirmations across two prime RMBS, two CMBS transactions and two CLN transactions.

In non-Japan Asia, all six tranches reviewed were affirmed. Three Korean credit card tranches and one Singapore CMBS tranche were affirmed based on the stable economic performance in these jurisdictions. The other two affirmations were of the short-term ratings on two Taiwanese structured credit transactions.

Most Long-Term Ratings had Stable Outlooks as of 31 March 2014, with the exception of two Positive Outlooks in Australia, and five Positive and two Negative Outlooks in Japan. The performance of collateral in Indian commercial vehicle transactions continues to deteriorate on the back of increased fuel costs and reduced freight rates squeezing the margins for operators. Fitch maintains a Stable Outlook on the transactions due to significant build-up in credit enhancement and continued excess spread that currently covers losses, even though delinquencies and defaults of underlying loans are deteriorating. Fitch will continue to closely monitor the asset performance in this sector.

Individual rating action commentaries relating to specific rating actions can be found on Fitch's website at www.fitchratings.com.

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