Napier's Manchester Unity Credit Union gets B+ credit rating

Standard and Poor's has issued a B+ long term credit rating to Napier's Manchester Unity Credit Union (MUCU), which is insufficient for it to be part of the government's extended deposit guarantee scheme. The deposit guarantee extension from October this year until the end of 2011 is only available to those non-bank deposit takers with a BB rating or better. Finance companies must have a credit rating by March 1 under the Reserve Bank's new regulatory regime. Here is the full statement below from Standard and Poor's.

Standard & Poor's Ratings Services said today that it has assigned its "˜B+' long-term counterparty credit rating to Manchester Unity Credit Union (MUCU), a credit union based in Napier in the Hawkes Bay region of New Zealand. At the same time we assigned our "˜B' short-term counterparty credit rating. The outlook is stable. "The ratings on MUCU reflect the credit union's very small capital base by international standards, and the below-peer capital ratios, at-call deposit base, and key-person risk associated with the small size of its business operations," Standard & Poor's credit analyst Gavin Gunning said. "These factors are offset by MUCU's very good credit-loss history and its low risk appetite." "The stable outlook reflects our expectation that MUCU will continue to demonstrate very good asset quality, even though New Zealand has only recently emerged from recession," Mr. Gunning said. The ratings could be troubled, however, if a major operational risk or other negative event were to affect MUCU"”in particular something that distresses capital or its at-call deposit base. While we do expect to be raising the ratings in the short term, this may happen in the long term consistent with MUCU's intention to introduce term deposits during 2010. If this strategy succeeds, it will ameliorate the risks associated with MUCU's at-call deposit base. Lasting benefits, however, are not likely to arise for some years.