Leighton Holdings decries S&P downgrade

Leighton Holdings, parent company of property developer Leighton Properties, has disputed a decision by Standard & Poor’s to downgrade its credit rating from “BBB/A-2” to “BBB-/A/3”.

Leighton Holdings chief financial officer Peter Gregg says the downgrade is not a true reflection of the company’s credit quality.

“The decision has been made primarily on the back of S&P’s assessment of the credit quality of our German-based parent Hochtief AG and their potential influence over the business,” Gregg says.

“We believe this is an unfair assessment and one that is not borne out either by the governance arrangements that we have in place or many years of practice.”

Gregg highlighted S&P’s acknowledgement that Leighton’s standalone credit quality remains satisfactory, its “liquidity profile is adequate” and its “current capital structure should enable it to withstand potential cost increases arising from performance risks related to its project portfolio”.

“We believe that for all of these reasons S&P should have retained Leighton’s BBB credit rating and we will continue to advocate that Leighton deserves a higher credit rating given our inherent strength,” Gregg says.

For the year ending June 2011, the Leighton Group made a loss before tax of $491 million, compared with last year’s profit before tax of $843 million.

Leighton Properties recorded a loss of $100 million over this period.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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