BSP retains B-plus B credit rating with S&P

BANK South Pacific (BSP) has retained its credit rating of B+/stable/B with Standard and Poor’s (S&P), BSP Capital Ltd (BSPCL) reported.
BSPCL yesterday said the rating reflected the bank’s strong market position, good capitalisation and profitability and adequate asset quality in the domestic context.
BSP’S credit rating is the highest possible rating attainable in PNG as the country’s sovereign rating is also at B+/Stable/B, according to the fund managers.
The bank is vulnerable to PNG’s sovereign credit risk due to its large exposure to government securities (41% of total assets at Dec 31, 2009)
This exposure is due to the high yield on sovereign debt that BSP is able to invest because of its good access to retail funding.
Ongoing economic growth in PNG has driven BSP asset growth, BSPCL said.
A majority of loans are made to commercial enterprises that benefit from a developing economy, driven by buoyant commodity prices.
BSPCL said BSP cornered 55% of domestic  loans and deposits todate.