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NZ Top 50 in healthier state

Friday, 11 February 2005

Rapid Ratings 2005 report finds NZ Top 50 in healthier state

Rapid Ratings, a leading, independent provider of global corporate credit and equity risk-rating research, today (Friday, 11 February) has released its third comparative risk report of the New Zealand Top 50 companies (by market cap) which indicates that the Top 50 Index is once again in a healthy state, investment grade and low to moderate risk, with an improved unweighted index average of B3 66 compared with B4 61 in 2004.

Further encouraging signs point to the overall good health of the index. These include:

Thirty-three companies (66%) rated at or above investment grade (B3 65) compared with 28 (56%) in the last report Seventeen (34%) companies operating at their peak rating in the last 5-8 years, depending on company data available, compared with 11 (22%) in 2004 Twenty-nine (58%) companies rated at moderate or low risk (compared with 24 in 2004). None are rated as high risk, compared with two in 2004.

“Our analysis shows that the NZ Top 50 is in good health and investment grade once again and has improved its overall risk profile,’ Dr Patrick Caragata, MD and CEO of Rapid Ratings, said. “Substantial increases in the number of investment grade companies, and more companies operating at their peak ratings, as well as fewer companies in the high risk categories are very positive signs.” The top rated company on the index is Sky Television News, the pay television provider, which has a rating of A3 89, meaning it is a very low risk company with assets of high quality. The company has consolidated its 2004 rating, and is 48% up on the previous year (2003) when it was rated slightly below the investment grade threshold at B4 60. Telecom NZ (A3 87), Auckland International Airport (A4 82), FP Healthcare (A4 80) all rated in the Top Ten. The two new entrants to the Top Ten are Restaurant Brands (A4 80) and Steel & Tube Holdings (B1 79)

The company which made the most significant turnaround in its ratings is wood products manufacturer Carter Holt Harvey, whose rating has improved to a current investment grade rating of B2 71, after successful restructuring Top 10 ranked companies on the NZ Top 50
Rank Company Name 2001 2002 2003 2004 Most current Rating
1 Sky Television Network Ltd D3 27 D2 33 B4 60 A3 89 A3 89
2 Freightways Ltd B1 76 A4 81 A4 82 A3 88 A3 88
3 Telecom Corp of NZ Ltd A4 84 A3 87 A3 88 A3 87 A3 87
4 Telstra B1 77 A4 84 A4 83 A4 84 A4 84
5 Auckland International Airport B1 79 B1 77 A4 82 A4 82 A4 82
6 FP Healthcare Ltd C1 59 A4 81 A4 81 B1 79 A4 80*
7 Restaurant Brands NZ Ltd C1 59 C1 59 A4 81 B1 78 A4 80*
8 Sky City Limited B1 77 A4 81 A4 81 B1 79 B1 79
9 Fletcher Building E2 14 B1 78 B1 79 B1 79 B1 79
10 Steel & Tube Holdings B3 67 B1 75 B1 75 B1 79 B1 79
*Based on six months annualised data

Looking to the future, the number of companies with positive outlooks increased to 22 up 6% from 19 in 2004. For the same period, those with negative outlooks declined by 6% to 12. Dr Caragata added: ‘The fact that two-thirds of the companies making up the index have a positive or stable outlook suggests that the index may not have peaked yet.’ Rapid Ratings’ System

At the heart of Rapid Ratings’ software-driven research are 25 industry-specific quantitative financial models that generate credit risk ratings for approximately 15,000 global companies. Rapid Ratings utilizes publicly available corporate financial data as inputs to generate a risk rating. Each industry model employs 62 financial ratios and a sophisticated multivariate econometric global benchmarking system. The models include a database of over 250,000 companies that reference 25-30 years of financial data.

Rapid Ratings’ Background

Rapid Ratings provides corporate financial health research on both listed and unlisted companies in the US, Canada, Singapore, Australia and New Zealand for investment funds, brokers, banks, large creditors, financial planner networks, financial advisors, accounting firms and retail investors. Rapid Ratings is the only qualified Australasian research firm to provide equity recommendation reports to some top research firms on Wall Street such as Lehman Brothers and Bank of New York Jaywalk, through the global settlement selection. Rapid Ratings’ research is now available on Bloomberg and will shortly be seen on several global networks.

Rapid Ratings is 76% owned by Collection House Limited, an Australian company that is listed on the ASX. Rapid Ratings has offices in New York, Toronto, Singapore, Sydney, Brisbane and Wellington.


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