South Canterbury Finance Credit Rating Timeline

UPDATED 20 August 2010: This post will be updated as new information comes through, but here is a summary of the Credit Rating with Standard and Poors last year and this year, with links to the stories.

See also: What Credit Rating of a Financial Institution that ran out of Cash Last Week?

As late as June 2009 SCF was successful at issuing $125m of 3 year bonds (the offer was fully over-subscribed). However, since June 2009, it is all down hill for SCF:



2nd July 2009 Comments from S&P reported saying that SCF's BBB- rating is partly based on support from Allan Hubbard

7th July 2009 SCF rating outlook lowered to negative on weaker [credit] profile

13th August 2009 Marac, South Canterbury Finance lose investment grade ratings at S&P
Both South Island finance companies were cut to BB+, a junk rating, from BBB-, the lowest investment level.

16 Sep 2009 South Canterbury Finance, the finance company owned by Allan Hubbard, halted allotments under its debenture programme and plans to issue a new prospectus pending its capital review and the extension of the Deposit Guarantee Scheme.

21st September 2009 South Canterbury Finance Ltd had its credit rating placed on Creditwatch Negative by Standard & Poor’s, which said the finance company’s risk profile has deteriorated since the rating was cut to speculative grade last month.
“Our concerns center on increasing pressure on liquidity; still-weak asset quality; and governance matters including, but not limited to, related party exposures,” said S&P credit analyst Derryl D’silva, in a statement emailed to BusinessWire.

20 Oct 2009 South Canterbury Finance (SCF) has registered a new prospectus for the issue of debenture stocks and deposit. In the prospectus the company states:

In the Company’s view, Standard & Poor’s considered that the United States private placement investors were continuing to review their funding support for the Company, and that if they decided to require repayment of the facility, that would, potentially, significantly exacerbate liquidity concerns and cause a downward revision of the Company’s rating by multiple notches, potentially into the ‘B’ rating category. [emphasis added]

25 Oct 2009 South Canterbury Finance runs short of cash and misses a US$45m payment to US note holders. The noteholders, however, do not call a default, as this would only result in the realisation of losses they might avoid by forebearing.

29 Oct 2009 South Canterbury Finance granted a prior charge secured NZ$75m funding facility, and fully draws it down, and uses it to pay the US$45m notes that were due 4 days earlier.

24 Dec 2009 BB+ Rating Affirmed

02 March 2010

South Canterbury downgraded to BB; may be cut below guarantee threshold within 3 months

See also my post

South Canterbury Finance Downgraded to BB, Watch Negative

6 May 2010

S&P maintained its BB (credit watch negative) rating on South Canterbury Finance’s long term debt

28th May 2010

S&P downgrades SCF's long term rating to B+ and short term rating to B.

22 June 2010 S&P downgrades SCF long term rating two notches to B- and short term 4 notches to C, and puts on Credit Watch Negative.

20 August 2010, S&P downgrades SCF's long term rating two notches to CC. (The short term rating cannot be downgraded anymore other than to D for default.)