Stable Ratings Performance in 4Q14 for Non-Japan Asia structured finance
Hong Kong, Jan. 15: Fitch Ratings today projected that structured finance (SF) transactions, backed by assets in Korea, India and Singapore are performing well against a background of stable economies.
A total of 14 publicly rated tranches from non-Japan Asia structured finance (SF) transactions were affirmed in 4Q14 as underlying assets continued to show stable performance within the agency’s expectations.
Structured finance is a service that generally involves highly complex financial transactions offered by many large financial institutions for companies with very unique financing needs. These financing needs usually don’t match conventional financial products such as a loan.
Asset performance remains well within Fitch’s expectations and where notes pay down on a pass-through basis, credit enhancement (CE) has grown steadily, resulting in the agency’s predominately Stable Outlook for this sector.
The affirmation of seven tranches from six Indian auto loan ABS transactions reflected Fitch’s view that the performance of the underlying loans remained within expectations, and that credit enhancement was sufficient to support the current ratings. CE has increased steadily from each of the respective closing dates, driven by the pass-through and sequential amortisation. Delinquency levels stabilised in 4Q14, after a rapid rise in 2013 and a continued climb in 1H14.
Two tranches from Small Business Trust 2013 were affirmed in 4Q14, reflecting satisfactory asset performance driven by high origination standards and collection efficiency on the underlying loans. The loans backing this transaction primarily finance the working-capital requirements of relatively low-risk small and medium enterprise borrowers who have a satisfactory payment record with the originator.
Four Korean credit card ABS tranches originated by Shinhan Card Co. Ltd. (Shinhan) were affirmed in 4Q14, reflecting low delinquency rates and stable payment rates. Shinhan Card 2014-2 International Ltd.’s performance has comfortably been within the early amortisation trigger levels since closing.
The affirmation of class A from Silver Oak Ltd., a Singapore CMBS transaction, reflected strong cash flow, adequate occupancy levels and debt service coverage ratio. Robust tourism and domestic consumption in Singapore continue to support the performance of the transaction’s underlying retail and hotel properties.