Tuesday 8th June 2010 |
Text too small? |
Allied Nationwide Finance has received a credit rating downgrade, which will ultimately lift the lender’s costs to borrow cash.
Credit rating agency Standard & Poor’s has lowered Allied’s long term issuer credit rating two notches to a ‘B’, and put it on creditwatch negative, giving it a 50-50 chance of a further downgrade in the next three months.
“While we are disappointed with the action taken by Standard & Poor’s, we remain focused on taking the necessary steps to improve our credit rating over time,” said Allied Nationwide chief executive John Mallon.
Direct Broking director David Speight said the credit downgrade will make the firm’s cost of borrowing money more expensive, and tighten up already squeezed margins. The only way to increase the margin would be to increase risk.
Allied Nationwide has loans worth about $280 million, and its debenture stock of almost $195 million is covered by the government’s retail deposit guarantee until October. The company has not applied for the extended guarantee.
Last week, www.depositrates.co.nz reported, Allied Nationwide lifted its 12-month through five-year investor deposit rates by 50 basis points (half a percentage point), and also introduced a nine-month special deposit rate of 7.5% as it seeks to raise funds in an already competitive market.
Shares in parent company Allied Farmers slumped 7.8% to 4.7 cents, and have more than halved this year.
Businesswire.co.nz
No comments yet