Allied Nationwide Finance (ANF) chief executive John Mallon says his company is "disappointed" by Standard&Poor's Ratings Services decision to lower ANF's long term issuer credit rating to B from BB-.At the same time, the B/B issuer credit r
Allied Nationwide Finance (ANF) chief executive John Mallon says his company is "disappointed" by Standard&Poor's Ratings Services decision to lower ANF's long term issuer credit rating to B from BB-.
At the same time, the B/B issuer credit ratings were placed on CreditWatch with negative implications.
S&P credit analyst Peter Sikora said on Friday that the ratings actions reflected a material deterioration in ANF's liquidity position beyond what S&P previously expected and factored into the BB- rating.
"In our view, this deterioration has increased ANF's exposure to a cash shortfall from now until October 2010 should reinvestment rates weaken from current already-modest levels or should cash inflows from loan repayments be delayed beyond our current expectations," Mr Sikora said.
A CreditWatch Negative listing by S&P implied a one-in-two likelihood that the rating may be lowered within the next three months.
"The rating could be lowered by one or more notches if ANF's reinvestment experience is not quickly stabilised, or if balance-sheet cash levels are weakened by any material and unanticipated delay in scheduled loan repayments," Mr Sikora said.
S&P said that if its credit concerns were much worse than currently envisaged and if, in its opinion, ANF's financial flexibility and contingent plans to respond to liquidity pressures were limited such that default was possible within six months under realistic scenarios, the rating could be lowered into the CCC category.
"We expect to resolve the CreditWatch after further discussion with management and further analysis of ANF's ability to contend with liquidity pressures at the B rating level in the current unstable operating environment for finance companies in New Zealand."
Today, ANF's Mr Mallon said that while being disappointed by the action taken by S&P, ANF remained focused on taking the necessary steps to improve its credit rating over time.
ANF's parent company Allied Farmers bought the troubled loan assets of Hanover Finance.
