Bangkok--6 Jul--Standard & Poor's
MELBOURNE (Standard & Poor's) July 6, 2012--Standard & Poor's Ratings Servicessaid today that it has raised its issuer credit ratings on New Zealand financecompany Broadlands Finance Ltd. (BFL) to 'CCC/C' from 'SD'. The rating outlookon BFL is negative.
The rating action reflects our opinion that BFL's current credit standing andanticipated forward prospects have improved since BFL missed an interestpayment on its loan to its key shareholder, on Dec. 15, 2011. Our ratings onBFL were placed on 'SD' (Selective Default) at that time. Notwithstanding ouropinion that BFL's credit standing has improved, our view also takes intoaccount that risks pertaining to both of BFL's business and financial profileremain high, and that BFL remains vulnerable to non-payment.
Since our prior rating action, BFL's capital ratios improved following theconversion to equity of an NZ$5 million loan to BFL from its key shareholder,and because of the shrinkage in its asset base. Improved capitalizationaffords debenture holders a greater degree of comfort concerning repaymentcertainty.
The outlook on the rating is negative, reflecting our opinion that liquidityrisks in the six-to-nine month timeframe remain on the downside, as asignificant portion of BFL's customer debenture book is due to mature, andgiven ongoing challenges concerning asset quality and collections on
receivables.