Geneva Finance credit rating lowered
Standard & Poor's has lowered Geneva Finance's credit rating after a debt-for-equity swap described by S&P as a "distressed exchange."
Ratings agency Standard & Poor's said today that it has lowered its long-term counterparty credit rating on Geneva Finance to 'SD' from 'CC'.
The rating was also removed from CreditWatch with negative implications, where it was placed on March 17.
At the same time, the insurer financial strength rating on Geneva's captive insurer, Quest Insurance Group Ltd. (Quest), was affirmed at 'CC' and removed from CreditWatch with developing implications.
A positive rating outlook has been assigned on the Quest rating.
The rating action follows shareholder and subordinated noteholder approval on March 31, to convert existing debt interests to equity.
This, in S&P’s view, constituted a distressed exchange, considering the conversion price is higher than the current market value of shares, and noting the limited liquidity of Geneva’s shares.
“We anticipate that the rating on Geneva will revert to a level no higher than ‘CCC’, following our further discussions with Geneva’s management and our subsequent analysis of the insurer’s business and financial profiles--including an evaluation of its prospects of operating as a viable entity in the future,” said credit analyst Peter Sikora, of the Financial Services Ratings group.
“The rating on Quest is expected to be positioned in line with that of Geneva, given its role within the group as a captive financial insurer.”
NBR staff
Wed, 06 Apr 2011
Wed, 06 Apr 2011
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Geneva Finance credit rating lowered
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