S&P: Scottish Re still developing

Standard & Poor's said its B rating on Scottish Re Group Ltd. and affiliated operating companies remain on CreditWatch with developing implications following the announcement by the company that the shareholders have approved the transaction by which MassMutual Capital Partners LLC and affiliates would provide an equity infusion of $600 million in a transaction to close in the second quarter of 2007.

MassMutual Capital and Cerberus Capital also will provide additional funds for short- and long-term liquidity and capital needs, the agency said. The transaction is set to close in the second quarter of 2007, assuming regulatory approval. Shareholder approval is a positive step for Scottish Re, S&P said.

If the deal closes, S&P said it expects to raise the counterparty credit rating on Scottish Re Group Ltd. to a level not likely to exceed BB-, and would raise the counterparty credit and financial strength ratings on Scottish Re's operating companies and the ratings on dependent unwrapped securitized deals related to Scottish Re to levels not likely to exceed BBB-.

If the deal is not consummated, the current ratings would likely be lowered by three or more notches, the agency said. Without the deal, S&P said, it would be difficult for Scottish Re to proceed with an orderly run-off or manage as an operating company.

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