Credit agencies give budget conditional okay
Credit agencies appear to have given yesterday's budget a conditional nod, though they are yet to formally affirm New Zealand's sovereign credit ratings.
Credit agencies appear to have given yesterday's budget a conditional nod, though they are yet to formally affirm New Zealand's sovereign credit ratings.
ANZ bank said the ratings would probably not be affirmed for a couple more weeks, but initial comments from Moody's and Standard&Poor's suggested the Government had done enough to avert a downgrade.
Moody's Investor Service said the budget showed future deficit and debt levels that remained supportive of the Government's Aaa bond rating and stable outlook.
S&P said that the contents of the 2012 budget were "consistent with the assumptions that feed into our sovereign ratings on New Zealand".
Last November, S&P placed the outlook for New Zealand's AA plus rating on a negative outlook. Fitch also has its rating of New Zealand on negative outlook.
Moody's said Government finance was being challenged by the costs and reduced revenue related to the Canterbury earthquakes, related insurance industry costs, and other one-time factors.
The elimination of the deficit, with the operating budget forecast to return to balance in the 2013-14 fiscal year, along with the resultant debt trajectory, which showed gross central government debt peaking at 38 percent of GDP before beginning to decline, were compatible with the current rating.
In relation to the average for other Aaa-rated sovereigns, government debt levels remained on the low side, Moody's said.
Fitch Ratings sovereign analyst Art Woo said the Government's overall fiscal strategy looked to be pretty appropriate given the tough circumstances surrounding the recent earthquakes.
NZPA
Fri, 20 May 2011
Fri, 20 May 2011
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Credit agencies give budget conditional okay
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