Standard and Poor's gives Fisher and Paykel Finance a BB rating

Standard and Poor's has assigned a BB long term credit rating to Fisher and Paykel Finance and given it a stable outlook, which means the personal finance company will be eligible to apply for the government's deposit guarantee extension. The deposit guarantee extension from October this year 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 Standard and Poor's statement below.

Standard & Poor's Ratings Services today said that it has assigned its "˜BB' long-term counterparty credit rating to Fisher & Paykel Finance Ltd. (F&PFL). At the same time, we assigned our "˜B' short-term rating to the New Zealand-based consumer-finance provider. The outlook is stable. "The ratings on F&PFL reflect its exposure to the cyclical consumer segment, its reliance on continuing banker confidence and support, and our view of its parent, Fisher & Paykel Appliances Holdings Ltd. (not rated). Our view of the parent influences, but does not constrain, our view of F&PFL," Standard & Poor's credit analyst Gavin Gunning said. "These factors are offset by F&PFL's good market position in the New Zealand consumer finance segment, its diversified customer base, and its good risk-management capabilities." The outlook reflects our expectations that the company's financial characteristics will remain stable in the medium term. The ratings could be raised if F&PFL were to become more independent from the parent, along with ongoing strengthening of its financial profile--building on recent efforts to reduce funding risks and increase capital. This scenario presumes the parent's stable credit characteristics will continue. Upwards rating movement in the near term is unlikely, although may be considered in the medium-to-long term. Negative ratings momentum would most likely hinge on ownership and funding. Should the parent's credit standing deteriorate this would likely have negative rating consequences for F&PFL. Waning banker confidence, stress associated with lower debenture renewals, or a major operational risk event (albeit improbable) could also trouble the ratings. An incremental diminution in asset quality or profitability, however, would be less likely to result in the ratings being lowered.

Fisher & Paykel Appliances Holdings' Chairman, Ralph Waters, commented, "We are very pleased with this rating outcome as it confirms the solid position of Fisher & Paykel Finance Limited as a public issuer of retail debentures and means the company is eligible to apply to join the new extended Crown Deposit Guarantee Scheme". "The BB Stable rating of Fisher & Paykel Finance Limited provides a sound platform from which the business can continue to offer investment opportunities for our retail investors," said Alastair Macfarlane, Managing Director of the Finance group. "We have offered retail debentures for nearly 30 years in the New Zealand market and see this avenue of funding as an important ongoing strategy of diversification and attracting an increasing share of the growing levels of private sector savings." "Funding the Finance business from both retail deposits and wholesale facilities will continue. The BB Stable credit rating for Fisher & Paykel Finance Limited is therefore a key factor for continuing to attract retail deposits to support the growth of the Finance business," said Mr Waters.