further revision on rating

B&B International Rating Lowered To 'CC' On Challenges In Retaining
Bankers’ Confidence; Stays On CreditWatch Negative
Melbourne, Nov. 21, 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 'CC' from
'CCC+', following disclosure of a dispute relating to the release of a deposit with a bank. The short-term
rating remains on ‘C’, and the long-term and the short-term ratings remain on CreditWatch with negative
implications, where they were initially placed on Nov. 10, 2008.
"We believe the dispute heightens the challenges faced by the company in retaining the confidence of its
main banking syndicate," Standard & Poor's credit analyst Sharad Jain said. "In our view, retaining bankers’
confidence is critical for Babcock & Brown group to maintain its financial flexibility during the long-drawn
process of the group’s asset-sale program and transition to a restructured business model."
According to Standard & Poor’s rating criteria and definitions, 'CC' is the lowest issuer credit rating in the
absence of an actual payment default, bankruptcy filing, or completion of a tender or exchange offer for cash
or securities having a total value that is clearly less than par.
The CreditWatch negative reflects that the rating on BBIPL is expected to be lowered to ‘D’ if the
worsening liquidity problems lead to a default. The rating is also likely to be lowered to ‘D’ if BBIPL fails
to meet its A$3.1 billion corporate facilities’ financial covenants and the banks accelerate payments under
the facilities, or if a facility is restructured 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.