revised credit rating

Just announced

B&B International Ratings Lowered To 'CCC+/C' On Restructure Plans; Stay
On CreditWatch Negative
Melbourne, Nov. 19, 2008—Standard & Poor's Ratings Services said today that it had lowered its long-term
issuer credit rating on Australia-based Babcock & Brown International Pty Ltd. (BBIPL) to 'CCC+' from
'BB-', reflecting the financial challenges faced by the company, which were highlighted in the restructure
announcement today. At the same time, the short-term rating was lowered to ‘C’ from ‘B’. The ratings
remain on CreditWatch with negative implications, where they were initially placed on Nov. 10, 2008.
"The ‘CCC+’ rating reflects our view of an increased risk that BBIPL will fail to meet its A$3.1 billion
corporate facilities’ financial covenants, which was also highlighted in the company’s announcement today.
Should this occur, the banks might accelerate payments under the facilities," Standard & Poor's credit
analyst Sharad Jain said. According to Standard & Poor’s rating criteria, a rating is likely to be lowered to
‘D’ if the lenders accelerate the payment of a facility, or restructure a facility in such a way that is deemed
by Standard & Poor’s as a distressed exchange. For example, a restructure could result in lenders not
receiving appropriate compensation. We note that Babcock & Brown intends to negotiate with its lenders for
amendments in the corporate bank facilities.
Given the global financial market conditions, and BBIPL’s recent experience, we believe that the company
is likely to face significant challenges in selling its assets and businesses, and consequently reducing its debt
at the corporate level.
To resolve the CreditWatch, we plan to meet with the company management to better understand the
proposed changes in the bank facilities, BBIPL's asset and business sales plans, ongoing exposure to
Babcock & Brown Power, and debt retirement progress. The CreditWatch is expected to be resolved by
early next year.
About Standard & Poor’s
Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost
provider of financial market intelligence, including independent credit ratings, indices, risk evaluation,
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more information, visit http://www.standardandpoors.com.au.
Media contact:
Sharon Beach, Melbourne, (61) 3 9631 2152, [email protected]
Primary Credit Analysts:
Sharad Jain, Financial Institutions Ratings, Melbourne, [email protected]
Ian Greer, Ratings Services, Melbourne, [email protected]