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B&B International Rating Lowered To 'BB-' Amid Difficult Asset Sale
Environment; On CreditWatch Negative
Melbourne, Nov. 10, 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 'BB-' from 'BB',
reflecting the impact of the financial market dislocation on the pace of asset sales required for BBIPL's debt
reduction plans. At the same time, the 'BB-' long-term and 'B' short-term ratings were placed on
CreditWatch with negative implications.
"The CreditWatch reflects our opinion that BBIPL has limited financial flexibility to meet any adverse
impacts flowing from market issues and the slower pace of the debt reduction than what we expected. The
debt reduction, in our view, is required to maintain the confidence of its bankers," Standard & Poor's credit
analyst Sharad Jain said. "Although BBIPL is making progress in selling several assets, these are proving to
be slower than what we had anticipated due to the difficulties faced by potential purchasers in the current
financial markets."
In addition, we understand BBIPL is fully drawn on its bank facility and in our view has limited prospects of
raising additional equity.
Standard & Poor’s intends to meet with the company to review BBIPL's progress on asset sales, ongoing
exposure to Babcock & Brown Power, debt retirement, and the group restructure. We expect to resolve the
CreditWatch before year end. Depending on the outcome of the review, the ratings could be affirmed or
lowered by one or more notches.