Trans-Tasman Credit Ratings Agency Receives Reserve Bank of New Zealand Approval

Corporate Scorecard (Part of the Veda Group) approved to rate non-bank deposit taker sector

The Reserve Bank of New Zealand has provided approval for Corporate Scorecard – part of the Veda Group and Australia’s leading independent ratings agency – to establish a credit ratings agency (CRA) in New Zealand for the non-bank deposit taker sector.

Corporate Scorecard is a licensed ratings agency in Australia and has the largest coverage of corporate credit ratings in the region. Corporate Scorecard’s local market knowledge and sector expertise is widely recognised, and its value proposition is underpinned by Veda Group’s unique trans-Tasman credit data assets.

While CRAs use macro-economic insights, local industry dynamics and trends to arrive at credit ratings, peer comparisons are core to the ratings analysis. Credit ratings provide relative risk rankings. Unlike other international CRAs, Veda relies primarily on local and Australian peers, owing to the richness of its local market data.

Brad Walters, Head of Rating Services, Corporate Scorecard, said Veda was uniquely placed to offer strong local knowledge due to its extensive trans-Tasman experience and vast troves of data. “Veda will deliver significant transparency to the financial sector by bringing its local market knowledge to the New Zealand market – in the form of data, analytics and insights that are not otherwise available in the ratings field,” he said.

“The value of credit ratings, as an early warning measure, comes from profiling an economy and its industries and identifying trends. Veda has a unique vantage point to utilise these insights, given its local data assets and breadth of industry coverage.

Credit ratings provide a relative risk ranking used for capital raising, capital allocation, risk pricing, stakeholder confidence and counter-party risk.

Corporate Scorecard currently rates many New Zealand corporates and has extended its capabilities to rate non-bank deposit takers (NBDTs) in New Zealand, being non-bank finance companies, credit unions and building societies that raise and manage funds from the public. Credit ratings provide an independent professional assessment of the future viability of a business, since investors and customers seek institutions that balance risk and return.

New Zealand has 31 licensed NBDTs, which sit alongside banks and insurers. Of these, 13 are currently publically rated. While some NBDTs are exempt from having a rating, many still seek one to build their profile, participate in foreign markets or to access wholesale funding.

The Reserve Bank of New Zealand has welcomed Corporate Scorecard’s approach in building up a number of unsolicited private ratings for the purposes of expanding the number of assessed businesses, further strengthening a local market baseline for credit ratings in New Zealand.

Carol Chris, Managing Director, Veda New Zealand, said Corporate Scorecard has access to a comprehensive data footprint for the ratings and has received positive feedback in the Australian environment, so it makes sense to bring this broader capability to the New Zealand business.

Veda will work with a number of New Zealand entities in the ratings space to increase the number of unsolicited private ratings, to build a New Zealand baseline and to strengthen the relative risk ranking for local comparison.

Corporate Scorecard has been added to the Reserve Bank’s list of credit ratings agencies approved under section 86 of the Non-bank Deposit Takers Act 2013.