S&P concerned about Auckland City Council's rising debt

International ratings agency Standard & Poor's has put Auckland City Council's "AA" long-term credit rating on negative watch because of concerns about its rising debt.

Monday, 14 November 2011

by Jenny Ruth

The move "signals our view that, owing to Auckland Council's draft plans to significantly increase its debt burden to fund capital expenditure plans, there is at least a one-in-two likelihood that we could lower the long-term rating on Auckland within the next 90 days," S&P says.

The council's final draft plan is expected to be released within the next month.

The council has two bond issues totalling $500 million listed on NZX.

"The rating action follows our discussions with Auckland Council which highlighted their plans to significantly increase capital expenditure, particularly in the area of transport," S&P says.

"At this stage, it is unclear as to how much of this capital expenditure will be funded using debt. However, current revenue and capital expenditure projections suggest that the council's debt levels will exceed 170% of operating revenues by fiscal 2013 and reach 200% by fiscal 2015," it says.

Any rating action is not likely to exceed one notch which would see the rating fall to "AA-".

Comments from our readers

No comments yet

Add your comment:

Your name:
Your email:	Not displayed to the public
Comment:
Comments to Deposit Rates go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Anti-spam verification:

Type the text you see in the image into the field below. You are asked to do this in order to verify that this enquiry is not being performed by an automated process.