Deposit rate news briefs

St Laurence to get rating, Marac changes provisioning process, TSB’s rating upped, Mighty River 15-year bonds.

Tuesday, 5 September 2006

Although Rapid Ratings pulled out of the New Zealand market earlier this year, its former manager Ron Keene has a licence to offer the service in New Zealand under his company Risk Analysis.

SLM's current B3 rating expires at the end of October. However, the company has told Keene it wants to go through a re-rating process. Marac changes provisioning process
The Marac group has reported its net profit was up 5% to $24.2million in the year to September 30, and finance receivables and operating lease vehicles reached $1.2 billion.

Commercial lending was again the strongest growth area. Marac says the selling and associated financing of motor vehicles continues to go through radical change and the company expects this trend to continue.

“As always, Marac has focused and will continue to focus on the upper-end of the market, with high-quality vehicles and low-risk borrowers,” managing director Brian Jolliffe says.

Marac's property business has been maintained at similar levels to those at half year, despite an overall softening in the property market. Marac's criteria for loans, coupled with internally imposed guidelines for total exposure ensure that it is not overly exposed to this market. During the year Marac changed to a dynamic method of assessing and accounting for bad and doubtful debts. It is a more modern and robust approach that uses actual business experience to assess the likelihood of loss. It is an ongoing process, performed regularly throughout the year that more accurately reflects the quality of finance receivables held at any given point in time. This changeover has resulted in a reduction of $1.8m in the provision for bad/doubtful debts in 2006.

TSB’s rating upped
Standard and Poor’s has raised its long-term credit rating on TSB Bank from BBB- to BBB.

"The ratings upgrade reflects TSB Bank's broadened business profile, with a progressively strengthening financial profile," Standard & Poor's credit analyst Derryl D'silva said. "Specifically, TSB Bank has been successful in its strategy to expand organically, while demonstrating strong asset quality and a good operating performance.

Also supporting the ratings upgrade is the bank's improving risk-management framework, although it remains less sophisticated than the risk-management frameworks of financial institutions rated similarly."

Mighty River 15 year bonds
State-owned power generator Mighty River is planning to issue a tranche of floating rate credit wrapped bonds with an expected maturity of 15 years.

The $300 million offer has been assigned an Aaa rating by Moody's Investor Service.

The rating is based on the unconditional financial guarantee - in favour of the bond holders - provided by XL Capital Assurance, which is rated Aaa for its financial claims paying ability.

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