OREANDA-NEWS. Fitch Ratings has revised the Outlooks on the Long-Term Issuer Default Ratings (IDRs) of CPC Corporation, Taiwan (CPC) and Taiwan Power Company (Taipower) to Positive from Stable. The companies' Long-Term Foreign-Currency IDRs have been affirmed at 'A+' and their National Long-Term Ratings at 'AAA(twn)'.

Fitch has also assigned National Long-Term ratings of 'AAA(twn)' to Taipower's TWD9.45bn senior unsecured bonds issued in August 2015. The ratings on the bonds are equalised to the senior unsecured rating of Taipower. Fitch is now rating the notes following requests from investors. The bond issue is split into three tranches as follows:
- TWD3.8bn 1.15% 104-3-A bond due 2020
- TWD4.0bn 1.4% 104-3-B bond due 2022
- TWD1.65bn 1.7% 104-3-C bond due 2025

KEY RATING DRIVERS
The revision of the Outlooks to Positive follows the same rating action on the Taiwanese sovereign on 12 October 2015 (see "Fitch Affirms Taiwan at 'A+'; Outlook Revised to Positive" on www.fitchratings.com). Taipower and CPC are assessed on a top-down basis and their ratings are equalised with the Taiwanese sovereign's ratings as per Fitch's Parent and Subsidiary Linkage methodology given their strong strategic and operational linkages with the state.

KEY ASSUMPTIONS
Fitch's key assumptions within our rating case for the issuer include:
- The linkages between the companies and Taiwan sovereign remain intact.

RATING SENSITIVITIES
CPC
Negative: Future developments that may, individually or collectively, lead to negative rating action include
-Negative rating action on the Taiwan sovereign
-Significant weakening of linkages between CPC and the sovereign (such as privatisation)

Positive: Future developments that may, individually or collectively, lead to positive rating action, include
-Positive rating action on the Taiwan sovereign, provided the linkages between CPC and the state remain intact

Taipower
Negative: Future developments that may, individually or collectively, lead to negative rating action include
-Negative rating action on the Taiwan sovereign
-Significant weakening of linkages between Taipower and the sovereign

Positive: Future developments that may, individually or collectively, lead to positive rating action, include
-Positive rating action on the Taiwan sovereign, provided the linkages between Taipower and the state remain intact

For the sovereign rating of Taiwan, the following sensitivities were outlined by Fitch in its
Rating Action Commentary of 12 October 2015:
The main factors that could lead to a positive rating action, individually or collectively are:
- Continued implementation of low budget deficits consistent with a downward trend in the gross general government debt to GDP ratio over the medium term.
- Evidence that Taiwan's trend growth performance is robust to structural adjustments in China and recent volatility in global trade volumes.

Future developments that may, individually or collectively, result in a revision of the Outlook to Stable include:
- Adverse macroeconomic or financial shocks that challenge medium-term economic growth prospects, and negatively affect public finances and the financial sector.
- A swift deterioration in the banking sector's asset quality, in light of the macro-prudential risks stemming from high private-sector leverage and rising China exposure.

FULL LIST OF RATING ACTIONS
CPC
Long-Term Foreign Currency IDR affirmed at 'A+'; Outlook revised to Positive from Stable
Short-Term Foreign Currency IDR affirmed at 'F1'
Long-Term Local Currency IDR affirmed at 'AA-'; Outlook revised to Positive from Stable
National Long-Term Rating affirmed at 'AAA(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1+(twn)'
Senior unsecured National Ratings affirmed at 'AAA(twn)'

Taiwan Power Company
Long-Term Foreign-Currency IDR affirmed at 'A+'; Outlook revised to Positive from Stable
Short-Term Foreign Currency IDR affirmed at of 'F1'
Long-Term Local-Currency IDR affirmed at 'AA-'; Outlook revised to Positive from Stable
National Long-Term Rating affirmed at 'AAA(twn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1+(twn)'
Senior unsecured National Ratings affirmed at 'AAA(twn)'
TWD9.45bn senior unsecured bonds issued in August 2015 assigned 'AAA(twn)' rating