NZ rating not immediately affected by SCF: S&P

Published: Tue 31 Aug 2010 05:45 PM
NZ credit rating not immediately affected by South Canterbury failure, says S
Aug. 31 (BusinessDesk) – New Zealand’s credit ratings aren’t immediately affected by South Canterbury Finance Ltd.’s $1.6 billion call on the retail guarantee after falling into receivership, Standard & Poor’s says.
The government made the payment to Trustees Executors Ltd., the trustee for debenture holders. The $1.6 billion amounts to 0.8% of New Zealand’s gross domestic product and was paid in full today. The government plans to recoup the cost through the fees charged for participation in the guarantee scheme and proceeds from the receiver.
Prime Minister John Key has said the net impact is $600 million – eating up two thirds of the $900 million provision for companies covered by the guarantee. The trustee today appointed receivers Kerryn Downey and William Black of McGrathNicol to South Canterbury, which has 35,000 investors eligible for reimbursement from the government.
S’s views of New Zealand's sovereign creditworthiness “are not immediately affected by today's announcement that money owed to SCF’s debenture holders was paid under New Zealand’s Crown retail deposit guarantee,” it said.
New Zealand has an AA+/A-1+ foreign currency debt rating at S The local currency rating is S’s top AAA/A-1+. The outlook is stable.
The nation had sound public finances, a sound financial sector, resilient economy and transparent policy environment, it said. Against that, New Zealand has a high level of private-sector external indebtedness that “offset these strengths, in our view,” S said.

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