(The following statement was released by the rating agency)
Dec 10 - Fitch Ratings says in a new report that it expects Asia excluding Japan to see more covered bond issuance in 2013, following legislative proposals by Korean and Singapore regulators for the origination of the asset.
In addition Fitch is aware of interest in covered bonds across the region in Asia including from India, Japan, Taiwan, Malaysia and Hong Kong. Although the agency does not expect these countries to see the issuance of covered bonds in 2013, many are likely to be well advanced in the provision of covered bond frameworks by the end of 2013.
In the report, Fitch also says the Rating Outlook for structured finance (SF) in Asia excluding Japan - dominated by Korea and Singapore - is Stable. This is supported by the economic performance of these two countries, continuous build-up of credit enhancement through note amortisation, and debt servicing ability.
Fitch expects the Korean SF transactions it rates to be able to withstand the effects of a slowing economy and high household debt. The agency expects moderate deterioration in Korean asset performance but does not expect this to have any effect on current ratings. In Singapore, CMBS is expected to be underpinned by a generally stable property market in Singapore in 2013. The hotel and office sectors are susceptible to a global economic downturn due to Singapore’s status as a regional business hub and Fitch will watch these sectors closely.
Details of the individual sector outlooks can be found in the report, “2013 Outlook: Non-Japan Asia Structured Finance” which is available at www.fitchratings.com or by clicking on the link above.