TT: Could the recent tensions in the Taiwan Strait lead to a downgrade in Taiwan's ratings?
McCormack: The event [the government's announcement to cease the operation of the National Unification Council and guidelines] constrained the ratings, actually, which means that Taiwan's ratings might be higher if the issue was not overhanging the country. This is a negative issue as we can see from the responses from the US and China, but not big enough for Fitch to alter fundamentally the risk profile. The situation has not become unmanageable.
Fitch will review Taiwan's sovereignty ratings around July and we have not seen substantial issues that would drive the ratings higher or lower so far.
We will closely watch the credit-card issue to see how it's resolved and if the government is leaning toward intervening in the market. If they do, this will give us less confidence in Taiwan's policymakers and the economic policy environment.
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