Favourable credit conditions underpin stable rating outlooks In Taiwan

January 21, 2018

TAIPEI - Taiwanese credit profiles are likely to improve slowly throughout 2018, buoyed by the recovering macro-economy and ample liquidity in the domestic banking sector, says ratings agency Standard and Poor’s.

But while most issuers have built sufficient credit strength to fend off long-standing credit risks, the emergence of several new risks could still pose a significant threat to the least prepared, it adds.
 Chief among risks are volatile foreign exchange rates and higher interest costs, rising competition from China's technology supply chain, volatile commodity prices, and Taiwan's stalled political relationship with China, S&P says.
 "We expect Taiwanese corporates to face a slightly higher risk of weakening profitability and cash flow in 2018 than counterparts in the financial services sector," said Taiwan Ratings credit analyst, Eva Chou.
 "That's despite most Taiwanese corporates having reduced debt and strengthened their cash flow generation in 2017." www.standardandpoors.com (ATI.