S&P Cuts Gerling Global Finance Debt to D; GKG to SD.Business Editors LONDON--(BUSINESS WIRE)--Aug. 18, 2003 Standard & Poor's--Standard & Poor's Ratings Services Ratings Service A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. said today it lowered its long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. rating on the EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 220 million subordinated notes issued by Gerling Global Finance Alpha B.V. and subguaranteed by Gerling-Konzern Globale Ruckversicherungs-AG (GKG GKG Gabah Kering Giling ) to 'D' from 'C'. At the same time, Standard & Poor's lowered its long-term counterparty credit rating on GKG to 'SD' (selective default) from 'BB'. The rating actions are in response to Gerling Global Finance Alpha's decision to defer the annual interest payment on its subordinated notes, which was due on Aug. 16. The subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". rating was initially lowered to 'C' from 'CCC' on July 3, 2003, in expectation of this (see related media release, entitled "Gerling Global Finance Alpha's Subordinated Debt Lowered to 'C' on Possible Interest Deferral deferral - Waiting for quiet on the Ethernet. ", published on July 3, 2003, on RatingsDirect, Standard & Poor's Web-based credit analysis system). Although the deferral of interest does not constitute an act of default under the terms and conditions governing the notes themselves, this action represents a constructive default under Standard & Poor's rating criteria. As subguarantor of the notes, GKG chose not to make good the interest payment, despite having the wherewithal where·with·al n. The necessary means, especially financial means: didn't have the wherewithal to survive an economic downturn. conj. Wherewith. pron. Wherewith. to do so, which constitutes selective default. "GKG's management has in effect decided that the cash that would ordinarily have been used to service the interest payment on the notes that it guarantees can currently be put to better use by supporting the orderly run-off of its obligations to policyholders," said Standard & Poor's credit analyst Peter Grant. ANALYST E-MAIL ADDRESSES peter_grant@standardandpoors.com karin_clemens@standardandpoors.com InsuranceInteractive_Europe@standardandpoors.com Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar A set of buttons or graphic images typically in a row or column used as a central point that link you to major topic sections on a Web site. If the navigation bar is a single graphic image with multiple selections, it is known as an imagemap. See imagemap. , select Credit Ratings Actions. Alternatively, call one of Standard & Poor's Ratings Desks: London (44) 20-7847-7400; Paris (33) 1-4420-6705; Frankfurt (49) 69-33-999-223; or Stockholm (46) 8-440-5916. Members of the media may contact the Press Office Hotline on (44) 20-7826-3605 or via media_europe@standardandpoors.com. Copyright 2003, Standard & Poor's Ratings Services |
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