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S&P lowers A&L’s long-term credit but outlook is stable

Standard & Poor’s says although it’s lowered Alliance & Leicester’s long-term credit rating, changes to the UK bank’s funding arrangements mean its off CreditWatch and the outlook is stable.

Its long-term counterparty credit rating has been lowered by S&P from A+ to A.

But the bank has been removed from the credit rating agency’s CreditWatch where its long-term rating had been placed with negative implications on January 31.

S&P has also affirmed A&L’s short-term counterparty credit rating at A-1.

Nick Hill, credit analyst at S&P, says: “This rating action follows A&L’s full-year results for 2007 and outlook for 2008. As a result of difficult funding conditions, A&L has taken out various secured borrowing facilities with a range of banks.”

S&P says these actions are prudent and have bolstered A&L’s liquidity and funding profile, while reducing its historical reliance on short-term funding.

Hill adds: “Overall, we consider that A&L’s new funding arrangements, fair degree of diversity, and its strong asset quality should support the ‘A’ rating.”

It warns though that A&L could still get a lower rating if further large impairments on Treasury assets of a similar magnitude to those of 2007 recurred in 2008, or if there were to be a sharp weakening in the UK economy or housing markets.

It says in the current market environment an upgrade is unlikely.


BUDGET 2008: Only 16% of UK properties still exempt from SD

Only 16% of UK properties are priced below the Stamp Duty Land Tax threshold of £125,000, says Rightmove.The property website says the continuation of Stamp Duty at current thresholds, means that nearly 50% of the UK’s housing stock on the market comes with a Stamp Duty fee of up to £2,500. Rightmove, which advertises properties […]

Mutual urges owners to shelter from storms

The Cheshire is urging home owners to check their insurance cover is comprehensive in light of the storms hitting the UK.Last week, the Met Office issued se-vere weather warnings and winds of up to 80mph battered the country.The Cheshire also advises home owners to check their roofs for broken tiles that could have been dislodged […]

Bear Stearns accepts emergency funding

US banking giant Bear Stearns has received emergency funding from JP Morgan Chase and the US Federal Reserve.JP Morgan will provide the necessary liquidity for the firm, which owns UK lender Rooftop Mortgages, in the next 28 days.Only days after issuing a formal denial that it faced liquidity problems, Bear Stearns last week entered into […]

Apple: a stellar technology story

By Ali Unwin, head of technology sector research

Apple recently announced the highest-ever recorded quarterly net profit ($18bn), with the sale of 74.4 million iPhones helping the company deliver $74.6bn of revenue for the quarter ending December 2014. These sales were largely driven by strong demand for the new iPhone 6 and iPhone 6 Plus. Highlights included Chinese iPhone sales doubling year-on-year and unit growth of 44% in the US — supposedly a well-penetrated market. Apple ended the quarter with $178bn in cash on its balance sheet, having generated a staggering $30bn in free cash flow during the quarter.

At Neptune, we have been long-term believers in the Apple story, and continue to hold the stock in a number of our portfolios based on the company’s long-term growth prospects. This is predicated on our belief that Apple has proved thus far that it can — unusually for a consumer electronics company — maintain high margins for a sustained period of time, even as adoption of new technology slows down and competitors produce similar-specification products.


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