(The following statement was released by the rating agency)
June 05 - Standard & Poor’s Ratings Services said today that the ratings on the four core companies of the Formosa Plastics group are not affected by weak market conditions in the second quarter of 2012, but the outlook on the ratings remains negative. Formosa Plastics Corp. , Nan Ya Plastics Corp., Formosa Chemicals & Fibre Corp., and Formosa Petrochemical Corp. are all rated ‘BBB+’ with negative outlooks and ‘cnA+’ Greater China credit scale ratings.
On June 4, the group disclosed that the four core companies generated new Taiwan dollar (NT$) 120 billion in total revenue in May 2012, down 16% month on month, and suffered significant inventory losses due to rapidly falling crude oil and product prices. We expect the group’s strong cost competitiveness and stabilizing market conditions to enable the company to generate credit metrics consistent with the current ratings over the next two to three quarters in our base-case scenario. However, the downside risk on the ratings remains significant if the market downturn continues or becomes deeper than we currently expect.