The overall credit strength of Taiwanese companies declined slightly last year due to prolonged weakness in the global economy, the unresolved European sovereign debt crisis and the nation’s weakening GDP growth, Taiwan Ratings Corp (中華信評) said in a recent report.
“The evolution of our rating actions was slightly negative for the past 12 months,” said Susan Chu (朱素徵), chief ratings officer at the local arm of Standard & Poor’s.
The growing negative bias bucked the upward trend of credit strength since late 2009 and cut across corporate and financial institutions, the report said.
The development has heightened industry risk, intensified market competition and weakened market demand across multiple corporate sectors, the report said.
For financial institutions, the credit evolution was largely attributable to the ratings agency’s negative outlook on the life insurance sector, which remains pressured by capital volatility and low earnings, the report said.
However, debt finance deals under Taiwan Ratings’ surveillance displayed stability last year, with no rating adjustments made on domestic fixed-income funds, the company said.
There were no defaults among the agency’s rated pool last year thanks to the non-financial corporations’ easy access to liquidity, corporate issuers’ prudent financial policy and a stable financial market, Taiwan Ratings said.