WRC Holdings Ltd. Outlook Revised To Positive After Similar Action On Parent; 'AA/A-1+' Ratings Affirmed

  • On Feb. 1, 2019, we revised the rating outlook on WRC Holdings Ltd.'s (WRCH) parent, Greater Wellington Regional Council, to positive from stable following a similar action on New Zealand.
  • Consequently, we are revising the rating outlook on Greater Wellington's investment holding company WRCH to positive from stable.
  • At the same time, we are affirming our 'AA/A-1+' long- and short-term ratings on WRCH. We equalize the ratings on WRCH with that on the council.
  • The ratings on WRCH reflect our assessment that there is an almost certain likelihood that extraordinary support would be forthcoming from sole owner Greater Wellington in a distress scenario.
MELBOURNE (S&P Global Ratings) Feb. 1, 2019--S&P Global Ratings today revised 
its outlook on WRC Holdings Ltd. (WRCH) to positive from stable. At the same 
time, we affirmed our 'AA/A-1+' long- and short-term issuer credit ratings on 
WRCH. 

The positive outlook reflects that on the ratings on Greater Wellington 
because we equalize the ratings on WRCH with that on the council. We could 
raise the ratings on both WRCH and Greater Wellington within the next two 
years. Our expectation is that WRCH's role will remain critical and its link 
integral to Greater Wellington. 

We could revise the outlook to stable if Greater Wellington's outlook was 
revised to stable, or if we consider WRCH role or link with the council was 
weakening.

We affirmed our ratings on WRCH to reflect our assessment that there is an 
almost certain likelihood that extraordinary support would be forthcoming from 
WRCH's sole owner, Greater Wellington Regional Council, in a distress 
scenario. 

In accordance with our criteria for government-related entities, our view of 
an almost certain likelihood of extraordinary support is based on our 
assessment of WRCH's:
  • Critical role, given that the company operates on behalf of the council and separates the council's core operations (those supported by its tax base) from its commercial assets. It manages a portfolio of important council-controlled trading organizations (CCTO), and also executes strategic policies for the council.
  • Integral link with the council as it is essentially an arm of Greater Wellington with a legal framework in place that provides for explicit support. The council is the sole owner of the company. Although Greater Wellington is prohibited from legally guaranteeing the obligations of WRCH, explicit support is demonstrated through the council's subscription of callable capital in the company. In addition, WRCH is the holding company for all the council's CCTOs, and there is significant council representation on the company's board with regular reporting mechanisms to the council. We consider that the council has an incentive to provide emergency support in a timely manner, if required.
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