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S&P lowers New Reclamation
Standard & Poor's said it lowered to SD (selective default) from CCC- the long-term corporate credit rating on New Reclamation Group Pty Ltd.
The agency also lowered the rating on the company's €116 million secured notes to D (default) from CCC-.
The recovery rating on the secured notes remains unchanged at 4, indicating 30% to 50% expected default recovery.
The downgrades reflect the company's recent announcement that between April and October 2012, it acquired 24% of its outstanding secured notes in the open market at a significant discount of about 25%, S&P said.
The agency said it does not consider the buybacks to be opportunistic, but rather to constitute a distressed exchange because of the company's weak liquidity and an uncertainty over the company's ability to repay the notes by the time they mature in February 2013.
S&P said it understands that management could continue to buy back further notes in the coming weeks.
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