Ratings Corp upgrades 63 companies

Taiwan Ratings Corp (中華信評), a local arm of Standard & Poor's, yesterday adjusted its credit ratings for 63 of 110 corporate clients, most of which are financial institutions, with a more stable outlook on their long-term corporate credit ratings.

"Our review has found that the risk profile of certain financial institutions has improved beyond our original expectations," Mei Chiang (蔣梅香), director of financial institutions ratings at Taiwan Ratings, told a press conference yesterday.

Chiang attributed the improvement to the accelerated integration within financial holding company (FHC) groups, better risk management -- especially by securities firms -- and continued indirect system support for licensed banks.

According to the agency's review, the long-term corporate credit ratings for 30 banks, 20 securities brokers, two insurance companies, three bill-finance companies and three financial-service companies have been slightly upgraded.

Among them, the outlook for the Bank of Taiwan's (台灣銀行) long-term corporate credit rating was upgraded from negative to stable with a "twAAA" rating while that of Shin Kong Commercial Bank (新光銀行) was also upgraded from a "twBB+" rating to a "twA-" rating with a stable outlook unchanged.

"The immediate capital injection [from its parent Shin Kong Financial Holding Co (新光金控)] to the bank and its name change after the recent merger has been well recognized," Chiang said.

According to Chiang, the fact that integration among FHC group members, especially in terms of organizational structure and human capital, has proceeded relatively smoothly since 2001 also supports the agency's view that the smaller, financially weaker members of FHC groups are better able to rely on support from stronger group members.

Meanwhile, rationalization and consolidation among domestic securities firms have resulted in stronger industry players and largely mitigated the risks posed by deregulation, she said.

She also praised the government's consistent efforts in pushing forward financial reforms so that the level of system or government support -- implicit support for smaller, financially weaker banks, and indirect support in government-linked banks -- has moved up a notch.

Taiwan Ratings also adjusted the ratings of five corporate entities, including two telecommunications players -- Taiwan Cellular Corp (台灣大哥大) and Far EasTone Telecommunications Co (遠傳電信) -- and Asia Cement Corp (亞洲水泥).

"With three strong rivals, the local telecommunications sector is the most healthy of all," said Tony Tsai (蔡東松), director of corporate ratings at Taiwan Ratings.

The rating agency had previously upgraded issuers in the steel, semiconductor foundry, automobile, shipping and petrochemical industries.

But yesterday's move was to upgrade issuers in the telecommunications, cement, printed circuit board and real-estate industries, as they have shown stronger financial profiles as a result of improved industry conditions and enhanced operating performance, Tsai said.

Eddy Yang (楊鎮龍), president of Taiwan Ratings, yesterday said that the company's strategic review of its rating profile was aimed at ensuring that the information contents embedded in the relativity of issuer ratings continue to meet market needs.

After seven years of assigning ratings and collating default and ratings transition data, the timing was right for a strategic review of the original ratings portfolio, he said.