Standard & Poor's has highlighted debenture refinancing pressures in a decision to keep its rating of finance company South Canterbury Finance Ltd on creditwatch with negative implications.
South Canterbury Finance's financial profile remained weak for its BB rating, the credit rating company said in a statement today.
South Canterbury Finance was still exposed to material debenture refinancing pressures leading to October, when a significant amount of its debentures were set to mature, S&P's said.
"We expect South Canterbury Finance's ability to deal with this liquidity and refinancing risk to become clearer by the end of May," credit analyst Derryl D'silva said.
"At this time, we'll be able to observe and assess the company's success in further building balance sheet liquidity and reducing its refinancing requirements leading into October 2010."
S&P also expected South Canterbury Finance to pursue asset sales, and recapitalisation to improve its overall financial strength.
It acknowledged that the company had improved its balance sheet liquidity position and overall prospects of managing its refinancing requirements by retaining support from its debenture investors and attracting new debenture inflows.
It has also been approved for the Crown's extended retail deposit guarantee scheme.
Short term liquidity will benefit from a capital injection of $37.5 million as of end-May.
