At the end of 2008 South Canterbury Finance was rated BBB- by Standard and Poors. Earlier that year, it has issued three year bonds (themselves rated BBB-) in the US private placement market. BBB- wasn’t such a bad credit rating for a small, not overly diversified unregulated domestic lender. But a year or two later, SCF failed spectacularly, at considerable cost to the taxpayer.
Today, S&P has come out downgrading the standalone ratings of three of the four big banks to BBB+. Of course, that is still two notches above SCF’s rating, but if it is really justified the news would have to be quite concerning. Note that the overall issuer credit ratings remain at AA-, reflecting the combination of probable parental support and the possibility of government support (for these systemically significant banks) in the event that they get into trouble. Their assessment of the risk of investors losing money hasn’t changed.
View original post 239 more words
Utopia, you are standing in it! 
Recent Comments