Fitch Ratings has said it expects the quiet domestic structured credit market in Taiwan to continue with limited origination and investment activity in the short-run.

Jackie Lee, a director in Fitch's structured credit team, said: "Given the excess liquidity within the island's financial system, together with stagnant loan growth and low corporate impairment losses, there have been limited incentives for local financial originators to securitise their existing credit books. In particular, under Taiwan's interpretation of Basel II, securitization of corporate loan portfolios is not an effective approach to managing banking capital efficiency."

April Chen, associate director in Fitch's structured credit team, added:"From the investment community's perspective, the losses suffered by Taiwan's major financial institutions from their investments in global synthetic collateral debt obligations and US sub-prime-related securities made before 2008 have significantly curbed their appetite for complex credit instruments. At this moment, they are completely averse to instruments involving foreign structured exposures but have generally retained their appetite for domestic corporate structured credit paper.

In 2009, Fitch affirmed all ratings of the notes issued by the existing six domestic securities-backed ABCP programmes and two CBO term deals. It said the liabilities of the existing transactions will continue to amortise as the underlying securities become due over time, and that the credit prospects for the underlying assets in these transactions are expected to be stable in the coming year.