Fitch affirms its ratings for Taiwan

Fitch Ratings, an international rating agency, affirmed yesterday the A+ sovereign rating for Taiwan, the same as before Saturday's presidential election.

Brian Coulton, senior director and head of Asia sovereign ratings at Fitch Ratings, said that even though there was some controversy after the election, he believed that serious political turmoil would be avoided. Fitch Ratings has not changed its rating of Taiwan, he added.

Coulton said that President Chen Shui-bian (陳水扁) was unlikely to stoke cross-strait tensions since he will probably adopt a more realistic approach toward China.

Fitch Ratings will review its Taiwan sovereign rating within the next three months, Coulton said.

Another international rating agency, Standard & Poor's, also said it would not change its view on Taiwan's credit ratings for the moment.

"The current impasse over the election results will not impact the ratings on Taiwan," Chew Ping (周彬), S&P's director of Emerging Asia Sovereign and International Public Finance, told the Taipei Times yesterday by e-mail. "The impasse is expected to be resolved."

The outlook remains "stable" on Taiwan's AA- long-term debt rating, the fourth-highest investment grade, and the highest A-1+ short-term rating on both foreign and local currency debts, Chew said.

Separately, Taiwan Ratings Corp (中華信評), S&P's local affiliate, said yesterday that it had no plans to adjust corporate credit ratings of local private companies over the political dispute and the collapse of stock market.

Taiwan Ratings said the performance of domestic industries had been improving over the past year, including high-tech manufacturers, telecommunication operators, auto makers and traditional industries. For example, the company has wrenched up the credit status of 12 corporations including Yulon Motor Co (裕隆汽車), Yang Ming Marine Transport Corp (陽明海運), Compal Electronics Inc (仁寶電腦) and Nanya Technology Corp (南亞科技).

Though declining consumer confidence and the fluctuations in the stock market may delay spending on cars and real estate in the next few weeks, Taiwan Ratings said these factors would not affect the companies' ratings as long as their long-term financial structure remained healthy.

Instead, the ratings agency revised its outlook for Hon Hai Precision Industry Co (鴻海精密), Taiwan's largest electronics company by sales, to "positive" from "stable."

"The outlook revision reflects Hon Hai's sustained solid financial profile, which exhibits strong debt protection measures and robust liquidity, combined with its continuous generation of positive free operating cash flow," said Tony Tsai (蔡東松), director of corporate ratings at Taiwan Ratings.