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Hanover Finance has recently been in discussions with international credit rating agency Fitch about the investor rout currently afflicting the finance company sector, but Fitch says the company's BB+ rating still stands.
Plummeting debenture reinvestment rates across the sector resulting from nine recent failures earlier this week saw Standard & Poor's put Geneva Finance's B- rating on "CreditWatch negative". That means there is 50/50 chance it may be downgraded within the next few weeks.
Fitch's Tim Roche yesterday said his agency had noted the "liquidity" problems in the New Zealand market and had been in contact with Hanover about it.
"What we can say at the moment is that we're comfortable with the position that they're in. Obviously they're feeling the stress along with other parts of the industry but having said that they're one of the larger finance companies out there and we think they're better positioned than a lot of these smaller players to withstand these stresses," he said.
"We've spoken to them and they do have alternative funding plans in place as well should it come to a point where it does start to materially impact their business."
Roche said Fitch had also recently highlighted Hanover's "potentially higher risk" lending.
In April, Fitch noted Hanover's "healthy appetite for risk" but said the company had incurred only minimal credit losses over an extended period.
"This can be attributed to good risk controls and a relatively benign credit environment." While that environment is arguably now less benign than five months ago, Roche said: "We do feel that they have adequate risk management systems around that and again we're not really seeing any change to our view from that perspective."
