S&P credit rating changes in New Zealand sure are interesting

Surging Auckland house prices lead to raft of S&P credit rating and stand-alone credit profile downgradeshttp://www.interest.co.nz/news/77085/surging-auckland-house-prices-lead-raft-sp-credit-rating-and-stand-alone-credit-profile

“The rating actions reflect our view that New Zealand financial institutions face heightened risks because of an increase in the country’s overall level of economic imbalances over the past three years. In particular, we believe that the rapid rise in house prices in Auckland during this period has amplified the risk of a sharp correction in property prices, although we consider that such a scenario remains unlikely in our base case,” S&P says.

S&P places Fonterra on credit watchhttp://www.nzherald.co.nz/fonterra-co-operative-group/news/article.cfm?o_id=298&objectid=11496769

Fonterra has been put on credit watch with negative implication by ratings agency Standard and Poor’s – a move the international agency says reflects weakening global dairy market conditions.

It means Fonterra could lose it’s A grade credit rating and face higher borrowing costs. S&P will make the final call when it has finished a review of Fonterra’s financial results for 2015.

S&P said it had placed Fonterra’s A long-term and A-1 short-term ratings on CreditWatch – these would include all the company’s associated debt products.

Move along though, nothing to see here. 90% of household “wealth” in housing and 25% of exports from dairy products. Do you have your popcorn standing by?