Fisher & Paykel Finance gets ratings news from S&P

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Standard & Poor's has affirmed Fisher & Paykel Appliances' finance company's “BB” credit rating with a stable outlook.

Friday, April 1st 2011, 5:51PM 2 Comments

by Jenny Ruth

The ratings agency says the company's exposure to the cyclical consumer segment and its reliance on continuing support from its bankers is offset by the finance company's good market position, its diversified customer base of personal borrowers and good risk-management capabilities.

The finance company, now New Zealand's second largest, recently renewed its banking facilities on more favourable terms but "its credit standing nonetheless depends on bankers' ongoing confidence and support," S&P says,.

At March 16, the finance company had a $385 million syndicated loan facility with three banks which replaced previous bilateral facilities. The new facility has tranches of one, two and three-year terms with sized of $175 million, $105 million and $105 million respectively.

On January 31, the finance company had used $237 million of its syndicated loan facility, about 63% of its funding requirements.

"We note the structure reduces refinancing risk and lengthens (the finance company's) liability profile, which we view favourably," S&P says.

It says its rating reflects the finance company's stand-alone characteristics and that it views the finance company as "non-strategic" to its parent.

It says it will monitor the finance company's concentration of debenture maturities leading up to its government guarantee expiring on December 31. "In our view, the potential for funding stress associated with debenture maturities or a weakening of banker confidence could translate into negative ratings momentum."
The finance company's managing director Alastair Macfarlane says the confirmation of the rating "will provide assurance for the market and give confidence to our existing investors," many of whom are already reinvesting beyond the expiry of the guarantee.

"With our solid credit standing and commercial integrity, we would like to attract new investors who can be sure of our commitment to offering first ranking secured debentures at competitive rates."

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