Specialty non-bank financial services company Liberty Financial has had its outlook upgraded to 'positive' from 'stable' by Standard & Poor's Ratings. At the same time, S&P has affirmed its 'BBB- ' issuer credit ratings on Liberty, which the agency said reflected the company's "established and defendable niche business position, its strong capital position, and its adequate liquidity and long-term wholesale funding." S&P said it expected Liberty's risk-adjusted capital ratio to continue to increase and be sustained at a level above 15.0 per cent in the next one to two years, despite strong growth aspirations and "the higher inherent risk associated with Liberty's non-conforming residential loan portfolio, which comprises about one-third of its residential home loan exposures."The company's New Zealand subsidiary also received similar treatment from S&P, "reflecting an unconditional and irrevocable guarantee provided by Liberty for timely payment" of any obligations on behalf of its NZ business. The "very small absolute capital base" and "reliance on confidence-sensitive debenture funding" by Liberty's NZ business were offset by "good underwriting policies, … supported by Liberty's advanced risk-assessment capability and reflected in its strong historical loss experience," S&P said.