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February 15, 2008 |
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GENEVA FINANCE: 'CC' Rating by S&P Remain on CreditWatch Standard & Poor's Ratings Services said that its 'CC' long-term counterparty credit ratings on New Zealand finance company Geneva Finance Ltd. (Geneva) remain on CreditWatch with developing implications, where they were initially placed on Nov. 5, 2007, after Geneva secured a moratorium on debenture withdrawals to April 30, 2008. The 'CC' insurer financial strength and counterparty credit ratings on Geneva's sister company Quest Insurance Group Ltd. also remain on CreditWatch with developing implications. At the time of the initial CreditWatch placement, there was upside potential to the ratings because Geneva was in active discussions on new funding arrangements. However, downside pressure to the ratings arose because of uncertainty regarding the company's future operating activities, funding, and recapitalization. Although Geneva subsequently failed to negotiate additional funding with a specific party, upside potential to the rating remains because the company is investigating other funding arrangements. "Resolution of the CreditWatch remains dependent on the outcome of current funding discussions," said Standard & Poor's credit analyst Shaun Evans. "A successful negotiation of an adequate funding package may provide scope for an uplift in the rating, with an upgrade likely to be limited to the 'B' category". Conversely, if Geneva were unsuccessful in negotiating a timely and satisfactory funding package, this would heighten the company's default risk. A 'D' rating would apply if the company were to default on debts due at, or soon after, the end of the moratorium period, or the company was placed into receivership. The CreditWatch is likely to be resolved at, or about, the date for the lifting of the April 30, 2008, moratorium, although success in securing additional funding could resolve the CreditWatch earlier. |
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