The stable rating outlook reflects our view that the Formosa Plastics (FP) group will maintain its improved profitability and cash flow at a satisfactory level over the next two to three years, supporting a ratio of funds from operations (FFO) to debt above 45%. The group's financial headroom should be sufficient to absorb potential market volatility during the period, as well as its anticipated large outlay at its shale gas-based chemical complex in the U.S. and other expansions over the next two to three years. We may lower the long-term rating on the core group members if the FP group's ratio of FFO to debt falls close to 45% for an extended period. Scenarios that could lead to this are:
