Geneva Finance has had its credit rating lowered by Standard&Poor's following an investor vote on Monday in favour of a scheme that will see them wait up to three years longer to get their capital back.S&P has lowered its long-term rating on Genev
Geneva Finance has had its credit rating lowered by Standard&Poor's following an investor vote on Monday in favour of a scheme that will see them wait up to three years longer to get their capital back.
S&P has lowered its long-term rating on Geneva Finance to SD from CC, and removed the rating from creditwatch negative where it was placed in February.
SD means a company has selectively defaulted on some obligations, while CC is non-investment grade and highly vulnerable.
"Under the revised agreement, the debenture and subordinated note investors have opted to defer about 30 percent of their currently scheduled principal repayments, which Standard&Poor's would view as a selective default," S&P said.
However, Geneva will continue to pay interest each month at the individual investor contracted interest rate.
"In our view, this arrangement is considered a distressed exchange offer and has resulted in a selective default under existing terms and conditions between Geneva and its investors."
S&P will review Geneva's ratings for potential future support from bankers, and will review management's ability to manage cashflows.
Geneva's rating could be raised to CCC, a step up from CC, but with a negative outlook.
Geneva froze its payments in November 2007, owing $142 million to its 3000 investors, and investors agreed to a six month moratorium on capital payments. The moratorium was extended in July 2008.
