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Greg Smith: Generate investment specialist on Fletcher asking for credit rating to be withdrawn · Best of Business

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  Speaker 2: Now.
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  Speaker 3: Fletcher Building has asked Moodies to withdraw its credit rating.
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  Speaker 3: Fletcher is currently rated BA A three, which is the
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  Speaker 3: lowest investment grade rating, so if it drops any lower,
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  Speaker 3: it's going to fall into the dreaded speculative grades. Greg
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  Speaker 3: Smith is an investment specialist at Generation with Us. Now, Hey, Greg, hey,
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  Speaker 3: you the what's Fletcher's best argument for not deserving this rating.
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  Speaker 2: Well, they've been selling efsets of the partier than about
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  Speaker 2: four to fifty million assets. Cells, have simplified the business
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  Speaker 2: and basically they don't really need the rating because they
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  Speaker 2: aren't raising capital like they were, saves on costs, saves
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  Speaker 2: on compliance, and basically, as you point out, they are
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  Speaker 2: the lowest of investment grade, so I don't really need
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  Speaker 2: their premium rating, smaller funding task. They've got investment grade
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  Speaker 2: like metrics. So yeah, being unrated isn't the three buried
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  Speaker 2: or raising capital. But they're not reading to do this.
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  Speaker 2: So anyway is Moody's going to listen to them? Well
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  Speaker 2: they have a choice, don't they, But yeah, feature is
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  Speaker 2: obviously cast that sort of votes. You work, but look,
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  Speaker 2: this isn't unprecedented, it's not common. But you go back
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  Speaker 2: to Transpower in twenty twenty, they actually asked for the
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  Speaker 2: ARAD to be with drawn as well, but Moody's actually
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  Speaker 2: chose to keep the public rating in place because there's
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  Speaker 2: saw a lot of securities on issue and there was
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  Speaker 2: strong in best of interest. But I'm not so sure
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  Speaker 2: that it's the same sort of requirements case.
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  Speaker 3: But we'll just have to see what's your assessment of
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  Speaker 3: the state of the company post the selling off of
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  Speaker 3: divisions and whatnot.
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  Speaker 2: Well, I think, yeah, obviously the busin is a lot
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  Speaker 2: more simple than it was. You know, a lot leaner,
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  Speaker 2: and you know some of the problematic areas are gone.
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  Speaker 2: And take the construction division for one, earning is a
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  Speaker 2: lot more stable. So they expect for the full you
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  Speaker 2: to put you between three seventy five and three eighty million.
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  Speaker 2: Construction projects are still progressing, but obviously there are some
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  Speaker 2: headwinds here that you think rising fuel coths or fil
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  Speaker 2: costs have been rising until recently, cost inflation. Your projects
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  Speaker 2: are still being canceled. But they're saying the second half
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  Speaker 2: of calend twenty six or the first half of API
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  Speaker 2: twenty seven still gonna be quite tough. But are thinking
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  Speaker 2: out lock is improving a bit. Obviously, we've got potentially
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  Speaker 2: the end of the conflict in the Middle East. We've
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  Speaker 2: seen all prices coming back, perhaps pressure off inflation and
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  Speaker 2: also importedly maybe not only the case for no more
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  Speaker 2: rate rises, but we can be talking about a situation
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  Speaker 2: where we see rates coming down and that it'll be
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  Speaker 2: helpful to the construction sector. But it does operate with
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  Speaker 2: a lag and developers they don't start projects straight away.
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  Speaker 2: So just because conditions look like they might be improving,
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  Speaker 2: So yeah, but the medium turn out lock is getting better.
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  Speaker 3: I think, oh god, that sounds good. Hey Greg, thank
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  Speaker 3: you very much, really appreciate talking to you at this
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  Speaker 3: end of the day. That's Greg Smith's investment specialist to
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  Speaker 3: generate
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