Friday 20th August 2010 |
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The Spencer family's finance unit, Equitable Mortgages, is the latest in a flurry of credit rating downgrades announced today.
Allied Nationwide was also downgraded to a D credit rating after it defaulted, and South Canterbury Finance fell two notches to CC. The downgrades were all announced by Standard & Poor's, one of the credit rating agencies.
Equitable Mortgages has been downgraded to BB- over its poor asset quality and inability to deal with late repayments.
S&P cut the financier's rating one notch, saying its arrears are above its level of comfort for a BB rating, along with a softer commercial property market, a lack of financing alternatives, and low property investor confidence, all adding to repayment pressures.
The rating has a negative outlook.
"The ratings action reflects Equitable's poor asset quality and its failure to resolve arrears as promptly as we anticipated," credit analyst Mark Legge said in a statement.
"This has undermined earnings performance and put some pressure on liquidity."
The downgrade comes on the same day S&P cut South Canterbury Finance deeper into junk territory as the deadline for its recapitalisation plan looms, while Allied Nationwide Finance, a unit of Allied Farmers, was sent to the receivers after it defaulted on a payment to debenture holders.
In March, Equitable was accepted into the government's extended retail deposit guarantee earlier this year when it had the required BB rating. Only four non-bank deposit takers have been accepted into the scheme.
S&P said Eequitable has kept adequate liquidity to meet its needs over the next three months as the initial guarantee expires, and has a reinvestment rate holding up at 55%.
Businesswire.co.nz
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