Good ratings news for finance firm

A small ray of sunshine is beaming on South Canterbury Finance after months of bad news, including poor results and ratings downgrades.

On Christmas eve, international ratings agency Standard & Poors affirmed SCF's rating of BB+ and removed it from CreditWatch Negative, where it has been since September 20.

SCF chief executive Nigel Gormack said the change in outlook had reduced the chance of any further downgrades from one in two to one in three.

"It is positive on two fronts. They have affirmed the rating and said there is less chance of you being downgraded in the future," he said.

SCF was told about its early Christmas present on Thursday.

"It is an independent acknowledgment that we are on the right track," Mr Gormack said.

Sharebroker Chris Lee said the slightly improved result reflected the improving cash flows that followed the new prospectus in October "and other areas where concern has lessened".

"But the real good news will result from SCF's new board's decision, following their review of the needs of the company and the opportunities in the non-bank deposit taking market," Mr Lee said.

"Investors will be delighted when SCF announces the details of its plans, which should resolve all of the concerns of S&P and investors."

The rating's agency said the affirmation reflected SCF's success in fixing specific concerns. The company had three new independent directors, was accessing the debenture investor market and its audited statements for fiscal 2009 revealed nothing of concern.

A downgrade of the company's credit rating by S&P in August gave investors in the private placement market in the US the right to be repaid US$100 million (NZ$142m).

That came after the 83-year-old company posted a $50.4 million loss in the year to June 30.

S&P warned that its expectations of SCF were not going to ease: "Our immediate concern is that SCF maintain higher liquidity, leading up to its recapitalisation plans; its failure to do so would likely to lead to the company being downgraded."

Negative pressure would abate if SCF acted appropriately, S&P said.