(The following statement was released by the rating agency)
July 05 - Standard & Poor’s Ratings Services said today that its ratings and outlooks on Formosa Plastics Corp., Nan Ya Plastics Corp., Formosa Chemicals & Fibre Corp., and Formosa Petrochemical Corp., the four core companies of the Formosa Plastics group, are unaffected by the group’s operating loss in the second quarter of 2012. The second-quarter operating loss of new Taiwan dollar (NT$) 16.3 billion on an unconsolidated basis was higher than our expectation. However, our base-case scenario that stabilizing product prices will help the group improve its performance and cash flow measures to a level consistent with current ratings over the next three to four quarters is unchanged. The downside risk on the ratings remains significant if the market downturn continues longer or grows deeper than our current expectation.
The four core Formosa Plastics group companies are all rated ‘BBB+’ and ‘cnA+’ on the Greater China credit scale. The outlook on the ratings is negative to reflect our view that the group’s weak performance during the current economic downturn will constrain the ratings.