Finance companies disappointed with Rapid Ratings' departure

After four years trying to build up a business out of providing finance companies with both quantitative and qualitative credit ratings, Rapid Ratings has decided to pull out of that segment of the market.

Thursday, 9 February 2006

by Jenny Ruth

Rapid Ratings charged $25,000 per rating and Keene says his company spent a minimum of 125 hours analysing each company including non-public data and interviews with all the key executives and would produce comprehensive reports of between 70 and 100 pages.

Keene says about 14 companies had been rated over the four years.

A big problem for Rapid Ratings is that New Zealand lacks a strong ratings culture, he says. "You need the investors and financial planners providing a strong push on finance companies to be rated in order to attract investment."

But New Zealand investors seem interested only in chasing the highest interest rates available rather than being interested in how safe their investments are, he says.

Strategic Finance was the first company to be rated and after its fourth rating maintained its B1 investment grade rating, the highest awarded.

"We're a little disappointed" at Rapid Ratings' withdrawal, Strategic chief executive Kerry Finnigan says. Having a rating helped investors differentiate between finance companies. "It gave investors the confidence that all our internal processes and procedures and compliance was second to none."

Strategic's current rating expires in November, in the meantime the company will look at being rated by another ratings agency, probably either S&P or Fitch Ratings.

St Laurence Mortgages has a B3 rating which expires in October. "We were quite disappointed with their decision," says chief executive Paul Chapman.

"We got on the ratings train reasonably early. We saw it as a strategic move for the company." St Laurence will also consider an alternative rating, he says.

Comments from our readers

No comments yet

Add your comment:

Your name:
Your email:	Not displayed to the public
Comment:
Comments to Deposit Rates go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Anti-spam verification:

Type the text you see in the image into the field below. You are asked to do this in order to verify that this enquiry is not being performed by an automated process.