With changes in the AMP group's business mix this year, S&P Global Ratings is clearer what form of financier AMP really is: "We now assess it to be mainly a banking group whereas we considered it to be mainly an insurance group in the past," analysis that flows from the offloading of it's once core life insurance business.
S&P yesterday lowered its long-term issue credit ratings on AMP Ltd's AMP Capital Notes and AMP Capital Notes 2 to B+ from BB-.
S&P removed both issues from CreditWatch, where the ratings agency had placed them with negative implications in June.
S&P said the downgrade "reflects our view that hybrid instruments issued out of a non-operating holding company (NOHC) of a banking group are typically exposed to a greater risk of deferral on payment of coupons compared with the hybrid instruments issued out of an insurance group NOHC."AMP Capital Notes and AMP Capital Notes 2 are not explicitly recognised as regulatory additional tier-1 capital instruments under banking prudential regulations.
Nevertheless, S&P said, "we expect these instruments to behave as if that were the case."