S&P lowers rating for B&B International
Standard & Poor’s Rating Services (S&P) has lowered its long-term issuer credit rating on Babcock & Brown International (BBIPL) amid a difficult asset sale environment.
The Australia-based investment bank’s rating fell to ‘BB-’ from ‘BB’ at the same time its short-term ratings were placed on ‘CreditWatch’.
S&P’s credit analyst Sharad Jain said the ‘CreditWatch’ placement “reflects our opinion that BBIPL has limited financial flexibility to meet any adverse impacts flowing from market issues and the slower pace of the debt reduction than what we expected. The debt reduction, in our view, is required to maintain the confidence of its bankers.”
Jain said BBIPL has sold several assets but the process is slower than anticipated due to the effect of current market volatility on potential purchasers.
S&P said in a press release that BBIPL is fully drawn on its bank facility and that the bank has “limited prospects of raising additional equity”.
S&P plans to meet with BBIPL to review its “progress on asset sales, ongoing exposure to Babcock & Brown Power, debt retirement, and the group restructure”. The outcome of the meeting will determine if the ratings are to be affirmed or lowered.
S&P said it expects to resolve the ‘CreditWatch’ before the end of the year.
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