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First S&P rating for non-bank finance company

Rating agency Standards and Poor’s is planning to increase its presence in the New Zealand market rating finance companies.

Wednesday, April 5th 2006, 6:50AM
The company yesterday assigned a rating to Marac and Standard and Poor’s credit analyst, Craig Bennett says more work will be done in New Zealand.

S&P has a number of bank clients in New Zealand and one other non-bank finance company has a rating. Later in the year S&P will put out some research on 30 finance companies.

Bennett says the increase in activity is a natural extension of its presence in this market, as opposed to a response to Rapid Ratings’ withdrawal.

Marac Finance has been given a BBB- long-term and A-3 short-term counterparty credit rating which puts it just into the investment grade category.

Bennett says a BBB is “only just” investment grade the rating is has a two-year forward looking horizon and it is tagged stable which means that the rating is not likely to deteriorate.

Marac is a wholly owned subsidiary of NZX-listed Pyne Gould Corporation.

It is the first non-bank finance company to get a “secure grade” rating. The other non-bank finance company with an S&P rating is Geneva Finance, which has a B+ rating which S&P calls “speculative grade”.

Marac managing director Brian Jolliffe believes Marac’s rating “sets a new credit rating standard for finance companies.”

“The rating gives independent confirmation of the quality we strive to deliver to our customers and provides our investors with a reassurance that they have made the right investment decision.“

Marac decided to seek an S&P rating as it believes it is important for investors and financial intermediaries to have complete confidence in the organisation undertaking such an important analysis.

“The move provides investors with a benchmark by which they can make more informed investment decisions and distinguish the level of risk associated with different companies’ investment offerings.”

S&P says the rating was a reflection of Marac's good asset quality experience, its experienced management, sound strategy and good market position in the New Zealand finance sector.

“We believe MARAC is well placed to maintain its business and earnings profile by continued focus on asset quality and liquidity management.”

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