S&P lowers Bank of South Pacific

S&P said it lowered the long-term rating on Bank of South Pacific Ltd. to B from B+.

The agency also said it affirmed the bank's short-term issuer credit rating at B.

The outlook is stable.

S&P also said it downgraded the bank following the recent lowering of the sovereign rating on Papua New Guinea.

The lower rating on Papua New Guinea follows a period of much slower economic growth than expected, the agency said, and lower-than-expected government revenues leading to fiscal deficits and rising government debt and debt service costs.

The ratings reflect a view that the bank is exposed to the high-risk economic and operating conditions across Papua New Guinea and other underdeveloped Pacific island nations, S&P said.

Despite the deteriorating operating environment in Papua New Guinea, the agency said it forecasts credit losses to remain broadly unchanged at between 0.7% and 0.8% over the next two years.

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