'AA' Auckland Council credit rating

Standard & Poors has completed its annual review of Auckland Council’s credit rating and have put it on CreditWatch with negative implications. The council currently has a public rating of "AA", which is the third highest credit rating available. "AAA" is the highest, followed by "AA+" then "AA".

Auckland Council Chief Financial Officer Andrew McKenzie says the review has been conducted within the context of Standard & Poors recent downgrade of the NZ Sovereign credit rating and consequential downgrade of other local authority and government-owned entities.

“It’s important to note Standard & Poors has not downgraded Auckland Council but put us on CreditWatch with negative implications, which means that Council will stay at its AA rating while Standard & Poors assess whether to downgrade or put us on to a negative ratings outlook over the next 90 days.

“A downgrade to AA- would return the council to the position it was in pre-amalgamation when Auckland City Council had a credit rating of AA-.

“The CreditWatch does not reflect any change in the security of Auckland Council or its ability to pay interest and refinance existing loans.

“Council’s existing loans are secured by its ability to rate and that has not changed.”

Standard & Poors has analysed Auckland Council’s baseline projections, which include the full consolidation of previous council financial results and budgets, the introduction of new funding arrangements, such as funding the capital cost of public transport initiatives like electric trains, and the impact of consolidating our financial policies.

Standard & Poors will undertake a review once they receive more detail on our ten-year Long-Term Plan.
Council is undergoing its own review of its funding arrangements and will undertake full public consultation on its Long-Term Plan and its wide range of projects and their funding.

Other highly rated organisations have been through a similar process recently – the US government, New Zealand government, Transpower and other major New Zealand councils have all had their credit ratings lowered in the past three months.

“Even if our credit rating is downgraded to "AA-" Auckland Council will remain in the top echelon of rated New Zealand borrowers. Only the Crown, government-related entities, the banks and a small number of other councils will be rated higher than Auckland Council.”