S&P Global Ratings has lowered its long-term and short-term credit ratings for AMP as it faces increased risks of disruption to its strategic direction and its ability to execute its strategy effectively.
It has cut its long-term credit ratings on AMP Ltd and AMP Group Holdings Ltd (AGHL) from “BBB” to “BBB-”, and the short-term ratings on AGHL from “A-2” to “A-3.” AMP Bank’s long-term ratings also dropped from “BBB+” to “BBB”,and its short-term ratings dropped to “A-2.”
“We lowered our ratings on AMP Ltd., AGHL, and AMP Bank to reflect our view that the overall creditworthiness of the AMP group is weaker. In our view, the group is exposed to challenges that may disrupt its overall strategic direction and its ability to effectively execute its strategy,” S&P said in its report.
“In our view, AMP group’s governance standards are adequate. Nevertheless, based on the recent developments, we do not consider the governance factors as strong as we previously considered.”
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The recent developments that convinced S&P to lower its ratings on AMP include the announcement that the company will re-evaluate its interests in its assets and businesses, as well as the departure of senior executives and board members in various parts of the group.
“These issues could provide impediments to the group’s future operating performance. Strong governance and management leadership is key to achieving a solid strategic turnaround, especially in the current environment,” S&P said.
“Our ratings on AMP Ltd’s additional tier-1 capital instruments remain on CreditWatch with negative implications. We may lower the ratings on these instruments by an additional notch if we consider that the hybrid characteristics of these instruments carry greater default risk.”a
