OREANDA-NEWS. Fitch Ratings has today upgraded the Short-Term Issuer Default Rating (IDR) of The Export-Import Bank of the Republic of China (Taiwan's Eximbank) to 'F1+' from 'F1'. At the same time, Fitch has affirmed the bank's Long-Term Foreign-Currency IDR at 'A+' with a Positive Outlook, National Long-Term Rating at 'AAA(twn)' with a Stable Outlook, Support Rating at '1' and Support Rating Floor at 'A+'. As the policy bank effectively acts as agent of the state, no Viability Rating is assigned. A full list of rating actions is at the end of this rating action commentary.

The rating actions follow the upgrade of Taiwan's Short-Term IDR and other rating changes on 22 July 2016. (see Fitch Applies Criteria Change to Global Sovereign Ratings at www. fitchratings. com).

KEY RATING DRIVERS

IDRS, NATIONAL RATINGS, SUPPORT RATING, SUPPORT RATING FLOOR AND SENIOR DEBT

The IDRs, Support Rating Floor and Outlook for Taiwan's Eximbank remain aligned with those of the Taiwan sovereign, reflecting Fitch's expectations of the extremely high probability of extraordinary support from the government in the event it is required. As such, the bank's Support Rating is at '1'. The policy bank is wholly owned by the state and is entitled to loss compensation from the state under The Export-Import Bank of the Republic of China Act. The bank is tasked with promoting trade and developing the Taiwanese economy and its policy mission is important given the country's export-dependent economic structure.

Taiwan's Eximbank has a strong linkage to the government. Funding and export insurance contributions from various government agencies and the central bank remained major sources of funding. The government has considered measures to reinforce the bank's policy role of promoting the nation's exports in light of the decline in Taiwan's exports in the past one to two years. The measures included a series of capital infusions between 2016 and 2018 so as to expand the bank's lending capacity. The government has injected into the bank new capital of TWD3.8bn by 1H16.

Taiwan's Eximbank's senior unsecured bonds are rated at the same level as its National Long-Term Rating, in line with Fitch's criteria.

RATING SENSITIVITIES

IDRS, NATIONAL RATINGS, SUPPORT RATING, SUPPORT RATING FLOOR AND SENIOR DEBT

Any rating action on Taiwan would likely trigger a similar rating action on the IDRs and Support Rating Floor of Taiwan's Eximbank. However, the latter's National Long-Term Rating, already the highest on the national scale, has a Stable Outlook and would likely remain the same regardless of the changes in the Taiwan sovereign ratings. Similarly, the bank's existing senior debt rating will also remain unchanged on the national scale should the Taiwan sovereign ratings be changed.

The rating actions are as follows:

Long-Term IDR affirmed at 'A+'; Outlook Positive

Short-Term IDR upgraded to 'F1+' from 'F1'

National Long-Term Rating affirmed at 'AAA(twn)'; Outlook Stable

National Short-Term Rating affirmed at 'F1+(twn)'

Support Rating affirmed at '1'

Support Rating Floor affirmed at 'A+'

Senior unsecured debt affirmed at 'AAA(twn)'