South Canterbury Finance BB+ rating affirmed

Today Standard and Poors affirmed South Canterbury Finance's BB+ credit rating.



This is surprising given the factors S&P gave as of concern on the Credit Watch, and the patchy progress in addressing them. See:

What Credit Rating for a Financial Institution that ran out of Cash Last Week?

The report quotes S&P as follows:

"Our immediate concern is that South Canterbury Finance maintain higher liquidity, leading up to its recapitalisation plans; its failure to do so would likely to lead to the company being downgraded," S&P said.
Negative pressure would abate if South Canterbury Finance was able to moderate liquidity pressures, manage its credit loss experience, eliminate related party investments and successfully restructure and recapitalise its business to a level that is consistent with a BB plus rating level, S&P said.

This seems to state that currently SCF is NOT consistent with a BB+ rating, but they affirmed it anyway.

Previously S&P said that with the liquidity concerns they could downgrade SCF to B, subsequently they missed a USD45m payment by 5 days, indicating they had basically run out of liquidity, yet they are affirmed to BB+. Marac has recapitalised and does not have or does not have to anywhere near the same extent of issues, but they are rated the same as SCF on BB+. It doesn't seem right to me, and makes me pay more attention to those complaining that credit ratings are inaccurate and/or not given much weight by wholesale and/or professional investors.