S& P lowers credit ratings
STANDARD & Poor’s is lowering the credit ratings of 23 Australian financial institutions including AMP, Bank of Queensland and Bendigo and Adelaide Bank due to what it says is an increased chance of a sharp fall in property prices. Auswide, MyState, Newcastle Permanent, Qudos and Rural Bank are also among the lenders to have their ratings cut by one notch, as S& P acted on concerns about record household debt and the continuing rise in Sydney and Melbourne property prices.
The ratings agency, whose decisions help determine how much lenders pay for the funds they need to make loans, said yesterday that private sector debt would hit 136 per cent of GDP next month.
“We believe the risk of a sharp correction in property prices has increased,” S& P said in a statement. TROUBLED online sports clothing retailer SurfStitch is considering selling off more of its assets and will close its US office as it expects its full- year loss to double.
The Gold Coast- based company sells branded clothing and shoes, including Billabong, Quiksilver, Vans and Converse, online in Australia, Europe, the UK, the US and Japan.
SurfStitch yesterday announced that weak apparel and footwear sales in its key markets, particularly in the UK, would drag it deeper into the red than the $ 5 million-$ 6.5 million loss it had forecast in February. The company now expects a loss of between $ 10.5 million and $ 11.5 million for its 2017 financial year.
This is SurfStitch’s second downgrade for the year and it sent the company’s shares tumbling 24 per cent to be 7.4c yesterday afternoon. THE next 2000 megawatts of electricity generation licensed in the state must be developed in North Queensland, economic development body Townsville Enterprise has declared.
The measure is one of five “solutions” the organisation has raised in submissions to State and Federal governments to resolve the region’s worsening power crisis.
The organisation’s other solutions are to:
• Fast- track the development of cost- effective base- load generation;
• Police the pricing behaviour of generators;
• Review the regulatory frame- work to address issues North Queensland; and
• Ensure North Queensland has access to competitively priced natural gas.
Townsville Enterprise director policy and investment Michael McMillan said lower prices were critical to not only attract industry but retain existing customers such as Glencore.
Earlier this month Glencore warned its North Queensland copper processing assets were at risk if energy prices continued to rise.
Mr McMillan said State and Federal governments needed to work together. He hoped a review of the National Electricity Market by chief scientist Dr Alan Finkel to be released relevant to shortly could provide the impetus.
“There’s clearly a need for Federal and State governments to come together to determine how we can place downward pressure on electricity prices in North Queensland,” Mr McMillan said.
According to the submissions, base electricity prices, exclusive of network and environmental charges, have more than doubled in North Queensland in the past three years and continue to increase at a rate of 30 per cent year on year.
It says wholesale prices have increased across the National Electricity Market with the Queensland price soaring 168 per cent in the five years to 2017.
The submissions point to the state having a key role because it owns or controls the dispatch of nearly twothirds of the generation capacity in Queensland and nearly all of the state’s network infrastructure companies.
But the submissions call on both State and Federal governments to use their influence to police the behaviour of generators so that wholesale prices match the costs of production rather than having prices being driven by “market distortion”.
About 750MW of solar generation is being developed in North Queensland this year but Mr McMillan said base- load or round- the- clock generation was needed to support industry.