07.27.2001
S&P outlook for Taiwan: Negative

• Development: The S&P cut Taiwan's long-term issuer credit rating to "AA" from "AA+", maintaining a negative outlook. Currently, Taiwan holds no sovereign debt.

• Analysis: The downgrade reflects poor fiscal management, a banking sector infected with mounting NPLs, and inefficient government policies that have failed to insulate Taiwan from the downturn. S&P does not rule out further downgrades.

• Primasia View: The current cyclical slump is exposing structural problems that will need to be addressed when the economy recovers. .