S&P tells South Canterbury how it can improve its rating

However the ratings agency warns that asset sales alone will not be enough to forestall a downgrade.

S&P confirmed SCF's current status, a BB rating with negative credit watch, which gives the finance company a 50:50 chance of being downgraded over the next three months, and said "SCF's ability to deal with this liquidity and refinancing risk to become clearer by the end of May 2010."

S&P said SCF wouldn't be able to meet its short-term liquidity needs with asset sales alone after the company indicated it would split its business into three units, one of which would house the firm's investments that were flagged for sale. The other units would separately hold SCF's problem loans and its finance operations.

Credit analyst Derryl D'Silva flagged the month of October, when the first government deposit guarantee was set to expire, as a major liquidity threat, with a large chunk of debentures are set to mature.