S & P removes port co from positive creditwatch

Credit rating agency Standard & Poor's today removed Ports of Auckland from its "creditwatch positive" following a return to full public ownership.

The port company was placed on creditwatch with positive implications in April when Auckland Regional Holdings (ARH) bid to lift its 80 per cent shareholding to 100 per cent.

Standard and Poor's today affirmed the port company's A/A-1 rating and said the creditwatch had reflected Ports of Auckland's potential to benefit from its 100 per cent ownership by ARH, which was accountable to the Auckland Regional Council (ARC). Standard & Poor's did not consider that a higher rating on Ports of Auckland (POAL) was warranted now.

"For any rating uplift to be achieved, support must come from both ARC and ARH, as the council approves ARH's funding activities and is likely to have higher credit quality than POAL," credit analyst Paul Draffin said in a statement.

Given that ARH was established as a standalone statutory entity in July 2004, Standard & Poor's considered that the relationship between ARC and ARH was still evolving, particularly in respect of ARH's investment in POAL.

"This limits the predictability of the council's future support to POAL. "Also, POAL continues to face a challenging competitive environment."

But the outlook for POAL was stable, Mr Draffin said.

- NZPA