S&P lowers Formosa Plastics units to negative

Standard & Poor's said it revised its outlook on the long-term corporate credit ratings on the Formosa Plastics group's four core companies - Formosa Plastics Corp., Nan Ya Plastics Corp., Formosa Chemicals & Fibre Corp. and Formosa Petrochemical Corp. - to negative from stable.

At the same time, S&P affirmed the BBB+ long-term corporate credit rating and cnA+ Greater China credit scale rating on all the companies. S&P also affirmed the BBB+ issue rating and cnA+ Greater China scale rating on the bond issued by Nan Ya Plastics (Hong Kong) Corp. Ltd.

"The negative outlook reflects our view that the profitability and cash flow protection measures of the four core group companies will weaken significantly over the next two to three quarters, due to the government's request for further factory closures," said credit analyst Raymond Hsu in a news release. "In addition, we believe that heightening regulatory risk and rising environmental protection pressures have aggravated the group's high asset concentration risk at its Mai-Liao complex.

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