Sharechat Logo

NZ business in credit rating tailspin

By Phil Boeyen, ShareChat Business News Editor

Tuesday 2nd October 2001

Text too small?
The trend of credit downgrades for corporate New Zealand is unlikely to turnaround any time soon says ratings agency Standard and Poor's.

The agency has published figures showing that of the 114 corporate entities it currently rates in New Zealand and Australia only five have either a positive outlook or CreditWatch positive on their rating.

S&P has pointed to the recent spate of high-profile corporate collapses, such as One.Tel, Pasminco and Air New Zealand's (NZSE: AIRVA) Ansett business, as an indicator that things are getting worse.

It also uses the number of rating upgrades and downgrades as a barometer of underlying credit quality. This comparison shows that for the first nine months of this year 19 Australian and New Zealand companies had their ratings upgraded but 38 were downgraded.

S&P's managing director, Chris Dalton, says although the local trend isn't as bad as the global picture, where downgrades outweigh upgrades by ratios of up to four-to-one, that's partly due to the absence of a local speculative grade bond market.

"Within Australia and New Zealand the corporate sector bore the brunt of rating activity during the first three quarters of 2001 and presents a much bleaker picture than the headline data.

"A total of six corporate issuers were upgraded in the first nine months of this year compared to 27 downgrades. This quarter's ratio of 4.5 to one is an increase on the ratio for the first six months of this year."

As examples, S&P says Pasminco's rating has been downgraded four times this year and Air New Zealand has been downgraded twice.

Mr Dalton says the examples are indicative of the underlying trend and he sees no turnaround in the near future.

"The collapse of Ansett and the uncertainty in world markets mean that Australian and New Zealand companies are facing increasing challenging times from a credit perspective," he says.

Father's Day SOON! Crazy Deals on ALL IRG Yearbooks - More than 50% OFF - $19.99 for 44th IRG Yearbook 2018-2019


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Fonterra resignation spooks Shareholders' Council
Air NZ deputy warns against Qantas cash
Air NZ loses momentum in November
State power profits below budget
One Air NZ share by Christmas
Air NZ investors have little choice - report
Star Alliance pulls together
Wrightson chairman to steer Air NZ
Tourism body gets $2 million shot in the arm
Free flights cost more