Asset Finance Credit Rating

Asset Finance has a long term counterparty credit rating of ‘B’ / Outlook Negative, issued by Standard & Poor’s (Australia) Pty Limited (“S&P”).

This is an issuer rating and is based on local currency (ie New Zealand dollar). S&P is a ratings agency approved by the Reserve Bank under section 157J of the Reserve Bank of New Zealand Act 1989.

A credit rating is a statement of opinion about the creditworthiness of the issuer, and central to this, is a view of the likelihood of default. Below is a table showing the ratings provided by S&P and the relative ranking in terms of their view as to the likelihood of default:

* The approximate median likelihood that an investor will not receive repayment on a five-year investment on time and in full based upon historical default rates published by the agency.

Source: Adapted from Reserve Bank of New Zealand “Know your Credit Ratings”, March 2010.

S&P defines the ‘B’ rating as follows: “An obligor rated 'B' is more vulnerable than the obligors rated 'BB', but the obligor currently has the capacity to meet its financial commitments. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments.” [taken from www.standardandpoors.com].  It should be noted that probability or likelihood of default is based on statistical analysis. Asset Finance has been in operation since 1997 and has never defaulted on payment of interest or principal to any investor.

The Negative Outlook recognises the Company’s vulnerability to asset quality and liquidity pressures in the current difficult operating environment. The S&P press release advised that the Company has a vulnerable funding profile that relies on ongoing investor support. Although the shareholders had been steadfast through the recent difficult operating environment, the ability and willingness of shareholders to provide additional capital, if required, remains unclear and depends on the Company’s ability to generate sufficient commercial returns to shareholders.  The Company is of the view that the Negative Outlook is likely to be upgraded where the Company is able to continue to manage its liquidity and boost balance sheet liquidity in the long term. The S&P report identifies that “the company’s operating performance has also been supported by the expertise of its board and staff in effectively managing the company’s credit losses to date”.  

The ratings analyses of S&P are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions. Ratings, credit-related analyses, data, models, software and output therefrom should not be relied on when making any investment decision.  S&P opinions and analyses do not address the suitability of any security. S&P does not act as a fiduciary or an investment advisor. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Ratings may be changed, withdrawn or suspended at any time.

S&P has not caused or authorised the issue of this Prospectus. S&P has not made any statement that is included in this Prospectus or any statement on which a statement made in this Prospectus is based, other than as specified above.  S&P, to the maximum extent permitted by law, expressly disclaims, and takes no responsibility for any part of, this Prospectus, other than the reference to its name and the statements included in the Prospectus as specified above.

More information on ratings and their meanings is available at www.standardandpoors.com or www.aboutcreditratings.com, and a fact sheet has also been produced by the Reserve Bank of New Zealand and is available on their website [www.rbnz.govt.nz].