Locally, results reporting drove most rating actions

In the local market Moody's lowered its ratings on Qantas and Telecom New Zealand and revised the rating outlooks on Reliance Rail Finance and Amcor to negative. S&P also changed its rating outlook on Stockland to negative and placed the ratings assigned to Mirvac on CreditWatch with negative implications.

Moody's lowered the long-term senior unsecured rating assigned to Qantas to 'Baa2' from 'Baa1', concluding the review for possible downgrade initiated in late November. The rating outlook is stable.

Moody's lowered its long- and short-term credit ratings on TCNZ to 'A3/P2' from 'A2/P1', concluding a review for possible downgrade initiated in December. The outlook on the ratings is stable.   

The rating action reflects ongoing pressure on TCNZ and Moody's expectation that this will continue given challenging operating conditions as TCNZ faces the combined effects of increased competition, tighter regulatory requirements and weak economic conditions. Moody's also expects that TCNZ's capital transformation program, as well as a continuation of high dividends, will lead to negative free cash flow and rising debt over at least the next one to two years.

In February 2007, Reliance Rail Finance issued $1.9 billion of bonds with maturities ranging from September 2016 to December 2035. The bonds were credit wrapped by XL Capital Assurance (now known as Syncora Guarantee) and FGIC, which are now both rated 'Caa1' by Moody's.

Moody's changed the outlook on 'Baa1' senior underlying rating on Reliance Rail to negative as a result of the ongoing delays in the delivery of the first train under a contract with the NSW government. Continuing delays will put the rating under pressure.

The rating outlook on Amcor's 'Baa2' long-term credit rating was changed to negative due to Moody's concerns that continued weakness in Amcor's key markets, particularly its US and European operations, could lead to a sustained weakening in the company's financial profile. The company also has a requirement for a high level of dividends which, combined with its ongoing capital expenditure program, is likely to lead to negative free cash flow over at least the next one to two years and could exert further pressure upon the rating.

S&P noted that Stockland's first-half fiscal 2009 results highlighted the volatility of earnings from the group's Residential division, which has placed pressure on Stockland's credit quality. The group's key credit measures for the first half of fiscal 2009 were below expectations for the 'A-' rating and while the full-year measures should improve, the rating outlook was amended to negative from stable. Should the group's residential division continue to encounter significant operating challenges in the next 18 months, the rating could be lowered by one notch.

S&P placed the 'BBB' long-term credit rating assigned to the Mirvac Group on CreditWatch with negative implications after the release of the group's first-half results, which reinforced S&P's ongoing concerns regarding weak operating conditions for the group's property development operations and future capital demands. Mirvac's key credit measures are expected to remain outside tolerances for the 'BBB' rating for an extended period, even after factoring in some improvement in residential sales for the second half and interest cost savings from the recent capital raising.

Nonetheless, any future rating action is not expected to exceed one notch. Resolution of the CreditWatch is expected next month.