90 at 9: South Canterbury shock; Big rural cash call; Current account deficit due

Click here for this morning's video. Bernard Hickey details the key news overnight in 90 seconds at 9am in association with ASB, including news Standard and Poor's has threatened  to downgrade South Canterbury Finance to B from BB+ because of its concerns about related party lending and liquidity. Standard and Poor's says there is a 50% chance of a downgrade and potentially multiple downgrades unless SCF can start raising money again and keep its US bondholders from withdrawing US$100 million. If SCF was cut to B, it would not be able to participate in the government's deposit guarantee scheme after next October. Any debenture holders with debentures that mature before October next year are still covered by the guarantee. SCF needs to raise fresh capital urgently, possibly as much as NZ$200 million. Pyne Gould Corp (Marac Finance), SCF, PGG Wrightson and Fonterra are all raising equity from the farming sector and its financiers. The total raised over the next 6 months is likely to top NZ$1.3 billion. This will be an issue for banks who lend to farmers. Meanwhile, the current account deficit is likely to improve to 7.2% in the June quarter from 8.5% in the March quarter, data later today is expected to show.