S&P confirms downgrade for Ports of Auckland

Standard & Poor's Ratings Services today confirmed it had lowered its long and short-term corporate credit ratings on Ports of Auckland.

Its rating fell to BBB/A-2 from A/A-1.

These actions reflect POA's material increase in financial risk appetite after Auckland Regional Holdings moved to 100 per cent ownership of the company in July.

S&P credit analysts Colin Atkin said: "Although Ports of Auckland has historically maintained a conservative financial risk profile, the company is planning to materially increase the group's financial leverage in the short-to-medium term via a distribution to shareholders and a significant increase in capital expenditure.

"These actions are indicative of the more aggressive financial risk appetite the port is willing to tolerate."

Mr Atkin said upward pressure on the rating was likely to be reliant on the adoption of a more conservative approach to debt or more explicit support from the shareholder and local council.

Downward ratings pressure could be precipitated by a more competitive operating environment than currently anticipated.

Despite the increase in financial risk, Standard & Poor's said that POA's strong business profile should continue to underpin the group's investment-grade credit profile.

- NZPA