(01 April 2010 – New Zealand) Standard & Poor’s has upgraded the long-term rating of Geneva Finance this week to CCC, only two hours after it was downgraded to SD from CC.The ratings agency said that the upgrade was made on the strength of the firm’s marginal liquidity position and they also upgraded the insurer financial strength rating of Quest Insurance Group, Geneva’s captive insurer, to CCC from CC, and removed it from CreditWatch Negative.
Both ratings have a negative outlook, with Geneva’s upgrade coming after debenture and noteholder investors voted to restructure the firm’s capital on Monday.
The restructuring lets Geneva’s bank funder, Bank of Scotland International (Australia), reduce its lending facility from NZ$35 million to NZ$30 million (A$23.2 million) with six-monthly repayments until it is fully repaid in March 2015.
S&P’s said that the review was due to firm’s new marginal liquidity position, which is expected to help it meet its immediate principal and interest repayments in full and on time under the new arrangement.
S&P says uncertainty about Geneva’s future liquidity position remains and the company still has to prove a return to profitability.
Geneva’s rating outlook is negative because its liquidity still depends on yet-to-transpire favorable business, financial, and economic conditions, S&P’s added.