More upgrades and affirmations

As flagged in early June, when S&P placed Mirvac Group's credit ratings on CreditWatch with positive implications, it resolved the CreditWatch last week and moved the ratings up a notch to 'BBB/A-2' and assigned a positive outlook. The impetus for the move was the recent A$1.1 billion equity raising and the significantly improved liquidity and financial profile, as a result.

S&P is also comforted by the group's more conservative financial policies and strategy to increase its property investment exposure and reduce its exposure to non-core property development and funds management activities. It is this change in strategy that supports the positive rating outlook. If successfully implemented a one notch rating upgrade could occur.

QBE Lenders' Mortgage Insurance Ltd's strong operating performance and sizeable resources place it in a sound position to absorb higher claims that could arise due to economic pressures such as slower economic growth, property-price decline and rising unemployment, and led S&P to affirm its 'AA-' insurer financial strength rating and amend the rating outlook to stable from negative.

S&P said the amendment of the outlook also reflected the fact that QBELMI has been able to replicate necessary risk models used by QBE to underwrite business, retain most senior management and key staff, and maintain strong relationships with existing customers. QBELMI has also benefited from access to QBE's actuarial, risk, and investment management resources, which has improved processes and expense management.

Moody's upgraded the ratings assigned to the Class B and C notes issued by Westpac/St George's Crusade Euro Trust No.1E of 2004 to 'Aaa' and 'Aa3' from 'Aa2' and 'A2', respectively. The upgrade reflects the improvement in the credit quality of the underlying mortgage pool and the LMI claims and loss experience to date, which has outperformed original expectations.

Further to revisions made to the methodology for rating government related entities, S&P affirmed the 'AAA/Stable/A-1+' ratings assigned to Bank Nederlandse Gemeenten and Nederlandse Waterschapsbank.

S&P is of the view that there is a very high likelihood that the Dutch state would provide timely and sufficient extraordinary support to both banks in the event of financial distress. The ratings on both therefore benefit from a two-notch differential from their stand-alone credit profile.

Bank Nederlandse Gemeenten has A$950 million of bonds outstanding in the domestic market, with maturities ranging from July 2012 to September 2015, and Nederlandse Waterschapsbank has A$1.1 billion of bonds outstanding with maturities ranging from March 2010 to November 2015. Bank Nederlandse Gemeenten also has NZ$350 million of September 2010 bonds outstanding in New Zealand.