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, November 14th 2011, 3:05PM
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-".
| « S&P cuts Telecom's rating to "A-" with stable outlook | IAG lifts 25 year bond issue to $325m, sets minimum coupon at 7.5% » |
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