S&P ups Home Capital Group

Standard & Poor's said it raised the long-term counterparty credit rating on Home Capital Group Inc. to BBB from BBB- and the counterparty credit rating on Home Trust Co. to BBB+ from BBB.

The outlook is stable.

The upgrade reflects a view of the company's quality and the positive trajectory of net earnings, the overall risk profile and performance of the investment and loan portfolio, solid capital base and steady hand of management, S&P said.

The ratings also consider its strong and defendable position in the Canadian residential mortgage sector, strong and uninterrupted growth in earnings over the past decade, satisfactory asset quality and strong capital adequacy position, the agency said.

These strengths are offset by its limited business and geographic diversification versus those of its larger Canadian peers, the higher risk profile of its nonprime mortgage customers, reliance on retail brokers to originate both deposits and mortgages, single-name exposures within the commercial mortgage book and the soft Canadian economy, S&P said.

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