Four Key Formosa Companies

This report does not constitute a rating action. Overview Key strengths Key risks The good market positions for the four Formosa companies' various petrochemical products throughout the Greater China region. A deeper industry downturn could keep the companies' profitability weak for an extended period. Good operating efficiency and product diversity underpinned by a high degree of vertical integration on a combined basis. The combined entity's performance and cash flow remain sensitive to volatile crude oil and commodity chemical prices. Good financial flexibility with sizable liquid non-core assets. Asset concentration risk from the largest single-site complex in Mai-Liao, Taiwan. Elevated debt leverage for an extended downturn. We use our Principles of Credit Ratings criteria to assess and assign a proxy group

...We use our Principles of Credit Ratings criteria to assess and assign a proxy group credit profile (GCP). We continue to base our assessment of the credit quality of the four key companies of the Formosa group--Formosa Plastics Corp., Nan Ya Plastics Corp., Formosa Chemicals & Fibre Corp. and Formosa Petrochemical Corp. on the proxy GCP. This is based on the pro forma consolidated financials of their audited consolidated statements....

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