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Six councils likely to see credit rating upgrade

A credit rating upgrade is on the cards for six New Zealand councils following a change in Standard&Poor's rating methodology.S&P placed the ratings on Auckland City Council, Dunedin City Council, Greater Wellington Regional Council, Hutt City Cou

NZPA
Tue, 21 Sep 2010

A credit rating upgrade is on the cards for six New Zealand councils following a change in Standard&Poor's rating methodology.

S&P placed the ratings on Auckland City Council, Dunedin City Council, Greater Wellington Regional Council, Hutt City Council, and Waitakere City Council on creditwatch with positive implications, which is likely to result in a one-notch upgrade.

S&P expects to make a decision within 90 days on the ratings, which are all AA-/A-1+ or AA/A-1+.

Tauranga City Council's A/A-1 rating has also been placed on creditwatch positive.

"The CreditWatch placements largely reflect our view of the institutional framework in New Zealand," said S&P credit analyst Anna Hughes.

"The strength of this framework has always provided support to our credit ratings on New Zealand local governments, but our revised criteria places further emphasis on a country's institutional framework."

The councils matching New Zealand's sovereign rating (AA+/Stable/A-1+) - Wellington and Christchurch city councils and New Plymouth District Council - are unaffected by S&P's methodology change.

Council ratings do not exceed the sovereign rating. They lack the capacity to cope with potential stresses better than central government, and they are likely to suffer if the Crown is hit by an economic or geopolitical crisis, S&P said.

Christchurch City Council's short-term rating has been removed from creditwatch negative, where it was placed by mistake after the region's earthquake on September 4. The more significant long-term rating remains on creditwatch negative.

NZPA
Tue, 21 Sep 2010
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Six councils likely to see credit rating upgrade
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