Standard&Poor's has assigned a BB credit rating to PGG Wrightson Finance Ltd (PWF) with a stable outlook.Finance companies must have a BB or above credit rating to be considered for entry to the extended Crown Retail Deposit Guarantee Scheme. Institut
Standard&Poor's has assigned a BB credit rating to PGG Wrightson Finance Ltd (PWF) with a stable outlook.
Finance companies must have a BB or above credit rating to be considered for entry to the extended Crown Retail Deposit Guarantee Scheme. Institutions with a lower rating will not be eligible for the extended scheme.
PGG Wrightson Finance is wholly owned by PGG Wrightson Ltd.
"The ratings on PWF reflect our opinion of the company's exposure to the agriculture sector, which is riskier than some other sectors, and its high-albeit reducing-counterparty concentration risk," Standard&Poor's credit analyst Gavin Gunning said.
"Nonetheless, these weaknesses are offset by the company's good brand in New Zealand's rural finance services market, stemming from the company's national footprint and access to its parent's broad distribution platform and large rural client base. PWF's reasonably diversified funding sources also support the ratings." "The stable outlook reflected PWF's reasonably diversified funding sources, an expectation that the company's improving capital position should give PWF some headroom to weather further industry challenges, and PWF's strategic importance to PGG Wrightson.
PGG Wrightson's recent recapitalisation and refocused strategy should enhance its capability to support PWF if needed.
S&P said any downward rating movement could be precipitated by evidence of lesser support by PGG Wrightson to PWF, or if PWF were no longer a core or wholly owned subsidiary of PGG Wrightson.
An upward rating movement in the near term was unlikely.
