Local government downgrades follow S&P's New Zealand sovereign rating cut

Followings its New Zealand sovereign rating downgrade, ratings agency S&P has lowered ratings on seven New Zealand local and regional governments.

The actions are:

• New Plymouth District Council: the foreign currency and local currency credit ratings have been lowered to ‘AA’ from ‘AA+’. The outlook on both ratings is stable. ·
• Wellington City Council: the local currency rating has been lowered to ‘AA’ from ‘AA+’. The outlook on the rating is stable. ·
• Auckland District Health Board: the long-term foreign currency rating has been lowered to ‘AA’ from ‘AA+’ and the long-term local currency rating lowered to ‘AA+’ from ‘AAA’. The outlook on the foreign currency rating is stable. ·
• Counties Manukau District Health Board: the long-term foreign currency rating has been lowered to ‘AA’ from ‘AA+’ and the long-term local currency rating lowered to ‘AA+’ from ‘AAA’. The outlook on the foreign currency rating is stable. ·
• Housing New Zealand Corp.: the long-term foreign currency rating has been lowered to ‘AA’ from ‘AA+’ and the long-term local currency rating lowered to ‘AA+’ from ‘AAA’. The outlook on the foreign currency rating is stable. ·
• Housing New Zealand Ltd.: the long-term foreign currency rating has been lowered to ‘AA’ from ‘AA+’ and the long-term local currency rating lowered to ‘AA+’ from ‘AAA’. The outlook on the foreign currency rating is stable. ·
• Earthquake Commission: the long-term local currency rating lowered to ‘AA+’ from ‘AAA’. The outlook is stable. 

S&P’s sovereign credit analyst Kyran Curry said the rating actions reflect the respective relationships to the New Zealand government.

“[They] reflect our view that there is a high correlation in economic and financial performance between them and the New Zealand sovereign. Furthermore, we believe that the[y] do not have sufficient operational and financial flexibility to deal with potential stresses better than the sovereign, and their credit characteristics are likely to deteriorate together with those of the sovereign in severe macroeconomic or geopolitical stress scenarios.”