Research Update: Ratings On Formosa Plastics Corp. And Three Associated Companies Affirmed At 'BBB+' On Low Debt Leverage; Outlook Stable

Four Taiwan-based companies-- Formosa Plastics Corp., Nan Ya Plastics Corp., Formosa Chemicals&Fibre Corp., and Formosa Petrochemical Corp. are engaged in oil refining and the manufacture of a wide range of chemicals and electronic materials, generating a combined EBITDA of new Taiwan dollar (NT$) 115 billion in 2020. We have revised our rating approach for the four companies to correct a misapplication of our Group Rating Methodology. We now assess the group status of the four companies as highly strategic because of their looser linkage than a typical group. As such, the ratings on the four key companies are one notch below the four companies' proxy group credit profile (GCP). Strong profitability from chemical and electronic material sales, a

...- Four Taiwan-based companies-- Formosa Plastics Corp., Nan Ya Plastics Corp., Formosa Chemicals & Fibre Corp., and Formosa Petrochemical Corp. are engaged in oil refining and the manufacture of a wide range of chemicals and electronic materials, generating a combined EBITDA of new Taiwan dollar (NT$) 115 billion in 2020. - We have revised our rating approach for the four companies to correct a misapplication of our Group Rating Methodology. We now assess the group status of the four companies as highly strategic because of their looser linkage than a typical group. As such, the ratings on the four key companies are one notch below the four companies' proxy group credit profile (GCP). - Strong profitability from chemical and electronic material sales, a reduced debt guarantee on the group's Vietnam steel mill, and lowered capital expenditure (capex) will enable the four companies to materially lower their debt and strengthen their credit metrics significantly beyond our previous assumption...

Research Update