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NZ Post sees no impact on debt on issue from S and P lowering rating outlook

Wednesday 22nd May 2013

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New Zealand Post, the state-owned postal service, says Standard & Poor's move to lower the outlook on its A+ credit rating won't affect debt on issue or create any problems for its financing activities.

S&P yesterday affirmed the ratings of NZ Post and its KiwiBank subsidiary while lowering the long-term outlook to negative from stable, saying increasing economic risks in New Zealand could undermine the credit-standing of KiwiBank, which makes up 70 percent of the group's earnings.

NZ Post chief financial officer Mark Yeoman said the outlook change is unlikely to affect its short-term commercial paper programme, which currently stands at about $30 million, and the next major credit event for the company is November 2014 call date for its $200 million of 2039 bonds

"This is not going to impact debt on issue," Yeoman said. "It's not a downgrade."

The negative outlook means there's a one-in-three chance of a cut in the next two years. S&P said while it deconsolidates KiwiBank in its credit metrics for NZ Post, it does take into account the contingent liability of NZ Post's guarantee of KiwiBank's $12.3 billion of deposits and $1.5 billion of borrowings.

As at Dec. 31, KiwiBank had some $1.69 billion outstanding under its debt funding programme, with the bulk comprising $601 million in its short-term euro commercial paper and $469 million in its Australian medium term note programme. A bank spokesman said the S&P move may have a small impact of wholesale trading but nothing of significance.

NZ Post has access to an uncalled $300 million capital facility from the government and its credit rating is supported by the "very high" likelihood of government support in the event of financial distress.

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