Council Receives Another ‘AA’ Rating from Global Credit Rating Agency

Council’s finances are in good hands according to the latest credit rating awarded by the international credit ratings agency, Standard and Poor’s.

S&P BuildingFor the third year running, S&P have rated Waimakariri an ‘AA/A-1+’, while acknowledging the stable outlook of Council’s financial situation.

‘AA’ refers to the Council’s long-term foreign and local currency creditworthiness and ‘A-1+’ refers to short-term issuer credit rating.

The stable outlook reflects Standard and Poor’s expectation that, despite a significant capital works programme, the Council will maintain debt at a practicable level, while sustaining a strong level of liquidity.

In layman’s terms, this means that Council is maintaining its ability to attract investors and secure external funding, should an unexpected situation arise that requires financial investment.

The borrowing that was required in the immediate aftermath of the 2010 earthquakes is an example of why this is so important.

The AA rating equates the Council with New Zealand’s national credit rating – the ‘sovereign rating’.

Standard and Poor’s does not rate any individual Council higher than the sovereign rating.

As with last year’s report, Council was evaluated as having strong financial management, budgetary flexibility and liquidity.

The Standard and Poor’s report referred to a high level of capital expenditure which is on-going, with the majority of that expenditure being for non-discretionary programmes such as sewer upgrades and earthquake infrastructure work  on property and land damaged in 2010/11.

Those projects have a limited ability for postponement.

The consistency of Council’s financial performance, and how it is rated, assists significantly when it comes to future borrowing.

This is because the perception of how Council manages its’ funding, and its overall financial capability, showcases its fiscal ‘reliability, which does impact on the interest rates it receives on lending.

The better the performance overall, the lower the interest rates on borrowing will be.