Wellington, Aug 20 NZPA - South Canterbury Finance's credit rating has been lowered for the second time in two months as the company's cash position continues to worsen.

Standard & Poor's has lowered its long-term credit rating to CC -- currently highly vulnerable -- from B-, as the company's liquidity and cash position weakened more than expected.

The short-term rating has been affirmed at C.

SCF founder Allan Hubbard, 83, and his wife Jean had their privately owned investment company Aorangi Investments, trust companies and their personal bank accounts placed into statutory management in June. An investigation by the Serious Fraud Office was also launched.

That prompted S&P to lower its long-term credit rating to B- from B+, and place it on CreditWatch Negative.

SCF is owned by interests associated with the Hubbards, but is not in statutory management.

"SCF's substantially diminished cash balance -- which is now at a level that in our view may see the company seek additional liquidity support -- reflects a combination of loan repayment delays and weaker-than-anticipated reinvestment experience and new debenture inflows," S&P credit analyst Peter Sikora said.

"This rating action is despite SCF having some success in managing forward maturities over the past few months."

SCF's ratings could be lowered again, to D, or default, if it does not meet any of its repayments in full and on time.

"The 'CC/C' ratings recognise that there is a strong possibility that SCF could default on its obligations within six months," Mr Sikora said.

The most likely scenario for a default was an inability to make headway with its recapitalisation plans before the expiry of its trust deed waiver at the end of the month.

SCF has until August 31 to convince investors to inject new capital, having been granted a waiver by Trustee Executiors over breaches of its trust deed. More cash is required to return SCF to compliance with its deed.