Macquarie Group in the spotlight

The Macquarie Group yesterday had its ratings outlook downgraded by Standard & Poor’s (S&P), was queried by the Australian Securities Exchange (ASX) on recent trading in its securities and revealed its exposure to the Lehman Brothers group and the American International Group.

S&P has revised its rating outlook for the Macquarie Group of companies to ‘negative’ from ‘stable’.

While the statement from Macquarie said this was due to the current financial market turmoil, it did admit that “the most likely scenario is that the agency’s ratings on Macquarie group entities will remain at their current levels”.

Macquarie reported that its exposure to the Lehman Brothers group is $21 million, while its exposure to the American International Group amounts to $33 million.

Macquarie pointed to the S&P information released late yesterday afternoon when queried by the ASX on movement in the group’s share price over the week.

The bank’s shares opened at $40 on Monday and had dropped to around $33 at the time of the ASX query. The ASX had also noted an increase in the volume of trading in the securities over the period.

Macquarie responded to the ASX stating that it had no information regarding or explaining the recent trading in securities, nor the price change or increase in volume of securities.

The ASX asked Macquarie to confirm that it was in compliance with the listing rules of the ASX and, in particular, the rule that requires listed entities to immediately provide any information that may affect the price or value of its securities.

Macquarie replied that it was compliant with these and other rules.

At the same time as downgrading its ratings outlook, S&P reaffirmed its ratings for the Macquarie group of companies. For Macquarie Bank Limited, these are ‘A’ long-term and ‘A-1’ short-term issuer credit ratings; and for Macquarie Group, Macquarie Financial Holdings and Macquarie International Finance, these are ‘A’ long-term and ‘A-2’ short-term issuer credit ratings.