NEWS


AMP SUBORDINATED NOTES 2 (ASX:AMPHA) RATING LOWERED TO A-/ORANGE FROM A+/ORANGE. AMP CAPITAL NOTES (ASX:AMPPA) RATING LOWERED TO A-/RED FROM A+/RED
Thursday, May 17, 2018


AMP Subordinated Notes 2 (ASX: AMPHA) rating lowered to A-/Orange from A+/Orange. AMP Capital Notes(ASX: AMPPA) rating lowered to A-/Red from A+/Red

Melbourne, 17 May 2018 - Australia Ratings has lowered the ratings assigned to the AMP Subordinated Notes 2 (ASX: AMPHA) and the AMP Capital Notes(ASX: AMPPA) - under the ASX’s Debt & Hybrid Research Scheme - by two notches to ‘A-’ from ‘A+’.

Revelations from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry are likely to have a significant but unquantifiable impact on the future prospects of the AMP Group, at this time.

Australia Ratings’ analyst Philip Bayley said “The cost of recent actions and the financial consequences for AMP’s future earnings capacity are expected to be severe. Capital adequacy is likely to be strained as a result and AMP’s future capacity to raise capital in need is open to question.”

Mr Bayley continued “For these reasons the credit rating assigned to AMPHA and AMPPA notes are being lowered to ‘A-’ from ‘A+’. Further rating action may be taken as greater clarity emerges around the extent of the damage done to AMP’s financial position. “

A group that was the market leader in Australia and New Zealand’s independent wealth management industry now faces a very uncertain future. The culture and governance of the AMP Group has been shown to be weak and lacking in integrity and its reputation as a custodian of wealth may be irreparably damaged.

Disclosures of misconduct and compliance concerns among AMP’s 2,800 affiliated financial planners reflect a lack of organisational oversight and control at the grass roots level but problems extend right to the highest levels of the group. AMP has been shown to have continued to pay commissions to its planners in breach of the FOFA reforms of 2013. AMP has also charged customers for services that were never provided.

AMP has admitted that affected customers have not been compensated or even informed of their eligibility for compensation for poor advice and other adverse practices that have led to losses being incurred by the customers. AMP has been unable to say when customers will be contacted.

In total, 15,000 customers are affected and AMP has allegedly misled ASIC on 20 occasions about these matters. The drafting of an independent report dealing with the situation, being prepared by Clayton Utz for submission to ASIC, went through some 25 drafts due to re-wording required by AMP’s former Chairman, and Legal Counsel. Some of these actions have led to recommendations of criminal charges being laid.

A new Chairman has been appointed to AMP, and an interim CEO is in place until a permanent appointment is made. There is considerable work to be done at the board level, among senior management and throughout the organisation to repair the damage that has been done. But in the meantime, more than half of the members of the board of directors have resigned and some shareholders are calling for all board members to be replaced by the end of 2018. Turning around the fortunes of an organisation the size of AMP will be more than challenging when continuity and corporate memory at the highest levels of the organisation are lost in this manner.

Compounding the challenges confronting AMP, the group is facing the prospect of multiple class actions being initiated by aggrieved customers and a $2 billion class action by shareholders was initiated last week. AMP is also facing the loss of institutional investment mandates. Australia Post is reviewing its default superannuation plan arrangements and an ethical investment fund will be removing its funds from AMP.

The on-going viability of AMP’s advice business is also under threat. ASIC is intending to ban grandfathered commission payments, which underpin the viability of AMP aligned financial planners.

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For further information contact:

Philip Bayley, Director
philip.bayley@australiaratings.com
03 8080 6684

Chris Dalton, Managing Director
chris.dalton@australiaratings.com
0403 584 600
03 8080 6684

About Australia Ratings

Australia Ratings is Australia’s local credit rating agency with over 60 years of experience in assessing and rating credit risk. Australia Ratings was formed in 2010 following regulatory reforms to the operation of credit rating agencies in Australia. Australia Ratings Pty Limited holds Australia Financial Services License No. 346138.

Opinions of Australia Ratings are determined by its analytical team in accordance with its rating methodology. The Board of Australia Ratings, whose members include Jarrod Brown, Chris Dalton and Mike Dontschuk, oversee the application of Australia Ratings rating methodology and the integrity of the rating process.

About Credit Ratings and Product Complexity Indicators

Australia Ratings credit ratings are an opinion about the creditworthiness of a specific debt security. They take into account the creditworthiness of the issuing organisation and any guarantees or other forms of credit enhancement on the security.

A Product Complexity Indicator is a colour coded indicator to help differentiate debt securities which may have similar credit attributes. It helps highlight complexity in the terms and conditions of a security that could rise to unanticipated variability or change in the returns from the investment.

Credit ratings are not a recommendation to buy, sell or hold a particular security.

View Australia Ratings' Credit Ratings Scale and Product Complexity Indicators (PCI).

ACORN CAPITAL EXPANSION PLATFORM ASSIGNED A 'VERY STRONG' INVESTMENT RATING BY AUSTRALIA RATINGS
Friday, May 04, 2018


Melbourne, 4 May 2018 -  Australia Ratings has assigned a ‘VERY STRONG’ investment rating to Acorn Capital Expansion Platform - the Platform comprising Acorn Capital Expansion Fund (ACEF) and Acorn Capital Expansion Trust (ACET).

A VERY STRONG investment rating indicates a very strong conviction that the Platform can deliver a risk adjusted return in line with the Funds’ investment objective - based on our investment rating scale to indicate how well we believe a fund will perform against a range of risks.

Acorn Capital Expansion Platform is managed by Acorn Capital Limited; and ACEF and ACET are to launch in May 2018. 

The Platform will primarily invest in innovative emerging Australian unlisted companies that are at early/expansion stage of development and with an objective for each fund to generate 20% in returns.  The Manager is looking to invest all the committed capital for both funds within 4 years, to return all committed capital within 5 years, and to exit any remaining investments in an orderly manner thereafter. The maximum term of each of ACEF and ACET will be 10 years.

Australian Ratings believes that ACEP (and either of its constituents, ACEF and ACET) represents a good access point for exposure in innovative and emerging Australian private companies.

The lack of research coverage of unlisted innovative Australian companies can be a potential source of enhanced returns and the upside can be large. However, for all of this potential, a disciplined approach by industry specialists is undoubtedly required.

Australia Ratings believes that investments in ACEF or ACET will be appropriate for high net worth individuals, substantial self-directed superannuation funds and established family offices, to form part of a balanced, diversified portfolio. Investment in the securities of these entities should, however, be considered as a long-term investment.

As new investment structures, both ACEF and ACET do not have any past performance. However, the Manager has significant experience and track record in investing in unlisted assets.

Australia Ratings has also assigned its Product Complexity Indicator (PCI) of ‘YELLOW’ indicating the fund as a complex financial product, with investment managers seeking to outperform their chosen mainstream market sector.

A full rating report is available from www.australiaratings.com/.

FOR MORE INFORMATION CONTACT:

Daniel Liptak, Director
daniel.liptak@australiaratings.com
03 8080 6684

ABOUT AUSTRALIA RATINGS

Australia Ratings is a local, independent rating agency that provides timely and credible ratings information and research to the broader investment community.As an ASIC-licensed rating agency, we provide general advice by issuing credit ratings on debt securities and companies; and fund ratings on Australian managed funds.We are Australia’s only agency that holds a retail Australian Financial Services Licence (AFSL). This enables both retail and wholesale investors to use our credit ratings to help them gauge credit risk and complexity of financial products sold in the Australian market.

Rating opinions of Australia Ratings are determined by its analytical team in accordance with its rating methodology. The Board of Australia Ratings whose members include Jarrod Brown, Chris Dalton and Mike Dontschuk oversee the application of Australia ratings rating methodology and the integrity of the rating process.

About Australia Ratings’ Investment Rating

Our investment rating reflects Australia Ratings’ current opinion of a fund’s or an investment’s ability to achieve its stated investment objectives in the near term.The rating expresses a view on the expected consistency of the fund’s or investment’s performance within its peer or style group and on the fund manager’s ability to produce superior performance amongst its peers in the near term with due regard to the medium-term consensus view of the asset class to which the product is benchmarked.

A five-point scale is used to differentiate our opinion on how well we believe a fund will perform against a range of risks.


About the Product Complexity Indicator

Our proprietary colour-coded product complexity indicator (PCI) highlights the complexity level of an investment by its terms and conditions’ structure and transparency that may affect an investor’s return.

 

 

ACORN CAPITAL INVESTMENT FUND LIMITED ASSIGNED 'VERY STRONG' INVESTMENT RATING BY AUSTRALIA RATINGS
Thursday, May 03, 2018


Melbourne, 3 May 2018 – Australia Ratings has assigned a ‘VERY STRONG’ investment rating to Acorn Capital Investment Fund Limited (“the Fund”).

The VERY STRONG investment rating indicates a very strong conviction that the Fund can deliver a risk adjusted return in line with the Fund’s investment objective based on our investment rating scale to indicate how well we believe a fund will perform against a range of risks.

Acorn Capital Investment Fund Limited, managed by Acorn Capital Limited, is an ASX listed investment company that invests in listed and unlisted microcap companies.

The Fund aims to create a diversified portfolio of microcaps and invest opportunistically in unlisted entities that offer better value to their listed counterparts.This provides investors access to companies differentiated by their smaller size and development stage - via a diversified portfolio.As at March 2018, the Fund’s investment split was 70%, 28% and 2% listed companies, unlisted companies and cash respectively.

Australia Ratings’ analyst Daniel Liptak said “The Very Strong investment rating reflects our view as to the competence, capability and market standing of key portfolio managers and staff running the fund, coupled with anticipated future fund investment manager’s deep experience, resources and solid track record.”

The Fund’s investment philosophy, investment strategy, investment process and risk management are well established and tried and tested. This view is based on the collective experience of the Acorn Capital executives and the fundamental research and investment expertise they exploit to the Fund’s portfolio’s advantage.

Australia Ratings has also assigned its Product Complexity Indicator (PCI) of ‘BLUE’ indicating the fund as a Relatively Simple financial product, with investment managers seeking to outperform their chosen mainstream market sector.

FOR MORE INFORMATION CONTACT:

Daniel Liptak, Director
daniel.liptak@australiaratings.com
03 8080 6684

ABOUT AUSTRALIA RATINGS

Australia Ratings is a local, independent rating agency that provides timely and credible ratings information and research to the broader investment community.As an ASIC-licensed rating agency, we provide general advice by issuing credit ratings on debt securities and companies; and fund ratings on Australian managed funds.We are Australia’s only agency that holds a retail Australian Financial Services Licence (AFSL). This enables both retail and wholesale investors to use our credit ratings to help them gauge credit risk and complexity of financial products sold in the Australian market.

Rating opinions of Australia Ratings are determined by its analytical team in accordance with its rating methodology. The Board of Australia Ratings whose members include Jarrod Brown, Chris Dalton and Mike Dontschuk oversee the application of Australia ratings rating methodology and the integrity of the rating process.

About Australia Ratings’ Investment Rating

Our investment rating reflects Australia Ratings’ current opinion of a fund’s or an investment’s ability to achieve its stated investment objectives in the near term.The rating expresses a view on the expected consistency of the fund’s or investment’s performance within its peer or style group and on the fund manager’s ability to produce superior performance amongst its peers in the near term with due regard to the medium-term consensus view of the asset class to which the product is benchmarked.

A five-point scale is used to differentiate our opinion on how well we believe a fund will perform against a range of risks.

 

About the Product Complexity Indicator

Our proprietary colour-coded product complexity indicator (PCI) highlights the complexity level of an investment by its terms and conditions’ structure and transparency that may affect an investor’s return.


 


 

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