Heartland Building Society’s credit rating – what is it and what does it mean?

Heartland Building Society has a credit rating of BBB- (Outlook Stable).

The rating, which is a statement of the creditworthiness of Heartland Building Society, has been provided by Standard & Poor’s (S&P).  S&P are an internationally recognised rating agency approved by the Reserve Bank of New Zealand to provide credit ratings for non-bank deposit takers.

Heartland Building Society’s rating is a ‘long term issuer’ rating which reflects Heartland Building Society’s creditworthiness over a time period of one year or more. The rating also assesses Heartland Building Society’s capacity to repay in New Zealand dollars.

What does a BBB- rating mean?

The BBB- rating means Heartland Building Society is considered to have adequate capacity to meet its financial commitments.  However,  adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments.

What is a credit rating?

A credit rating is a rating agency’s opinion of an institution’s ability to pay back in full and on time all the money they have promised an investor.  In Heartland Building Society’s case, this is the funds its investors have placed with it.

Credit ratings are based on detailed research and analysis by a ratings agency, which takes into account the financial history and current financial position of the institution.  Ratings are continuously reviewed, although most ratings are subject to annual review.

What is the scale used for credit ratings?

Generally a lower credit rating indicates a higher risk that an institution will ‘default’ and an investor will not get their money back in full and/or on time as promised. The S&P rating scale is shown below. Heartland Building Society’s BBB- (Outlook Stable) credit rating sits in the ‘BBB Adequate’ part of the scale.

Source: adapted from Reserve Bank of New Zealand “Know your credit rating” document March 2010.

Ratings between AA and CCC may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

A Standard & Poor’s rating may also include an "outlook" assessment.  An outlook assessment considers the potential direction of a long-term credit rating over the intermediate term (typically six months to two years).  An outlook assessment is not necessarily a precursor of a rating change. The common rating outlook definitions are: Positive - means that a rating may be raised; Negative - means that a rating may be lowered; Stable - means that a rating is not likely to change; and Developing - means a rating may be raised or lowered.

Where can I find more information?

• You can find out more information about Heartland Building Society in our Investment Statement or Prospectus, or by calling 0800 26 27 22 to talk to our investment team.
• The Reserve Bank has some useful information on credit ratings on its website - www.rbnz.govt.nz.
• Additional information can also be found on S&P’s website – www.standardandpoors.com.
• Investors may also wish to engage a financial adviser for independent advice and Heartland Building Society encourages you to do so. On the first page of Heartland Building Society’s Investment Statement you’ll find information on engaging a financial adviser.

Click here to view the current Investment Statement for Heartland Building Society’s Deposits.
Click here to view the current Prospectus for Heartland Building Society’s Deposits.

If you have any questions regarding the above disclosure, call our Investment Team on 0800 26 27 22. We're here to help.

Credit ratings are only one tool in assessing risk, and the Reserve Bank advises investors to seek more information on making wise investment decisions. S&P’s credit ratings are statements of opinion, not statements of fact or recommendations to buy, hold or sell any securities. Ratings may be changed, withdrawn or suspended by S&P at any time. All Call and Term Deposits are made with Heartland Building Society. See Heartland Building Society’s Investment Statement for more details about our credit rating. Our current Investment Statement can be obtained from our Investment Team on 0800 26 27 22 or by clicking here.