South Canterbury lashes out at further downgrade

Friday 28th May 2010

South Canterbury Finance has criticised a decision by Standard and Poor's to further lower its credit rating.

The rating agency today gave SCF a short term credit rating of B, removed the Creditwatch Negative outlook and adjusted the long term rating to B+. The outlook for both ratings has been set at Creditwatch Developing.

SCF chief executive Sandy Maier says Standard & Poor's goes some way towards acknowledging the progress SCF has made, but does not give full credit for the real progress made, particularly the recent momentum in building liquidity.

He says the company started its turnaround months ago and is achieving significant results. Its cash balance has increased substantially, the investor retention rate is improving and the programme to reduce the debenture maturity profile between now and October is proving highly popular with investors.

The programme to manage the maturity profile is being done in two tranches. The first has been very successful with two out of three investors who have responded to date, with debenture investments totaling more than $110 million maturing between now and July, accepting longer dated maturities in advance of maturity.

"In essence Standard & Poor's are now saying we are not going fast enough. With all due respect to Standard & Poor's, we believe this misses the point of the turnaround we are pursuing.

"All along our aim has been to restructure the business in an orderly way to underpin its long term sustainability. Doing so will protect the interests of all investors and stakeholders more effectively than striving to meet the short term goals and expectations of the ratings agency."

Maier says the ratings downgrade does not affect SCF's Crown guarantee under the retail deposit guarantee scheme which expires on 31 December 2011, nor does the downgrade constitute a breach of any covenants under South Canterbury Finance's trust deed or other financial arrangements.

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