Wed, Jan 21, 2009 - Page 12 News List

Fitch lowers rating of CPC to negative

By Kevin Chen  /  STAFF REPORTER

Fitch Ratings Ltd yesterday lowered its outlook on CPC Corp, Taiwan’s (CPC, 台灣中油) AA long-term local-currency rating to negative from stable, matching its outlook cut on Taiwan the previous day.

The UK-based ratings agency cut its outlook on Taiwan’s AA long-term local-currency rating on Monday to negative from stable, citing the nation’s increasing public debt and declining tax revenue amid a slew of government measures to boost the slowing economy.

“CPC has the same ratings as the Taiwan sovereign, reflecting the very strong implied governmental support for the company and its systematic importance to the country’s economic development,” it said in a statement issued yesterday.

Despite a revised outlook on CPC’s long-term local-currency rating, Fitch said it affirmed the local refiner’s long-term foreign-currency rating at A+, with a stable outlook.

Fitch also affirmed CPC’s short-term foreign currency rating at F1, national long-term rating at AAA(twn), national short-term rating at F1+(twn) and senior unsecured rating at AAA(twn), with a stable outlook.

Fitch assigns its long/short-term local/foreign-currency ratings, or Issuer Default Rating, to companies and sovereign nations regularly to reflect the latter’s abilities to meet financial commitments on a timely basis.

In CPC’s case, Fitch’s cut on the company’s long-term local-currency rating outlook indicates increased risk on its NT dollar debts, while an unchanged outlook on the firm’s foreign-currency outlook rating suggests few concerns about the company’s recovery of its foreign currency-denominated debt.

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