Taiwan Ratings Corp (中華信評) yesterday said that the performance of its rating pool last year remained largely resilient to external challenges, albeit with a mild increase in negative bias in the second half.
“The majority of our ratings maintained a stable outlook throughout the year, even in the corporate sector, which experienced the heaviest impact from the tariff spat between the US and China,” the local arm of Standard & Poor’s (S&P) Global Ratings said in a report.
As a result, there was a slight increase in negative bias in the second half of last year, reflecting negative rating actions in the corporate sector as waning global demand created pressure on profitability and cash flow generation, it said.
Taiwan Ratings did not offer any upgrades for the corporate sector last year, but made three downgrades and six downward outlook revisions.
The financial services sector displayed a generally positive rating performance last year, leading Taiwan Ratings to upgrade six financial institutions, while downgrading two.
The upward actions mainly reflected prudent capital management and improved capitalization, it said.
Most structured financial transactions under its surveillance also showed a stable rating performance last year, supported by their conservative deal structure and steady counterparty support, despite asset performance volatility, Taiwan Ratings said.
The company downgraded a collateralized bond issuance due to the trustee’s failure to obtain a refund of a withheld tax from tax authorities, it said.
The credit quality of fixed-income funds were generally stable last year, despite continued yield competition, fluctuations in fund size, and the lower interest rate environment, which drove some fixed-income funds to pursue more aggressive investments, Taiwan Ratings said.
“We placed one fixed-income fund on credit watch with negative implications because of a compliance incident related to the fund company,” it said.
In all, Taiwan Ratings undertook six upward rating actions and five downward actions on rated entities in the nation’s financial and corporate sectors last year, it said.
The number of downgrades reached a three-year high, as there were no downgrades in the previous two years, it said.
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