S&P: Pefco on watch

Standard & Poor’s said it placed the A+ and A-1 issuer credit ratings, A+ senior secured rating and A-1 commercial-paper rating on Private Export Funding Corp. (Pefco) on CreditWatch with negative implications.

The CreditWatch placement reflects the expiration of the continuing resolution under which the Export-Import Bank of the United States had been operating, S&P said.

The ratings reflect its favorable market access and low cost of funds relative to other finance companies, the agency said.

As a result of these agreements and its relationship with Export-Import Bank, Pefco has established a very stable business position with little credit risk in its loans and very strong capital adequacy on a risk-adjusted basis, S&P said.

These strengths are tempered by a narrow business position that is highly dependent on its relationship and guarantee agreements with Export-Import Bank, significant use of commercial paper to fund assets, high leverage and modest earnings, the agency said.

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