Super City gets AA rating

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Auckland Council, known as the Super City, is being rated AA by credit rating company Standard & Poor's in recognition of its status as the economic and financial hub of New Zealand.

The AA long-term rating and A-1 plus short-term rating of the council formed from the merger of nine councils in Auckland has a stable outlook.

S&P said the council is the single largest regional economy in New Zealand, accounting for a third of its gross domestic product.

"The ratings reflect our opinion of the strong institutional framework benefiting local governments in New Zealand, a strong and diversified local economy, and the council's strong management," S&P's credit analyst Anna Hughes said.

But the new council needed to deliver on large infrastructure projects. The rating company cited increasing debt levels and only moderate budgetary flexibility as offsetting factors in the rating.

"The stable outlook reflects the strength of Auckland Council's financial position, which allows the council some flexibility for undertaking additional borrowings.

"Downward pressure would be placed on the rating if Auckland Council's debt increased more quickly and higher than forecast - in particular, if it reached about 160 per cent of revenue."

The most likely scenario for this would be either a change in policy that led to a more aggressive capital-spending programme or a weakening of the operating position, or our assumption on underspending proving to be incorrect, S&P said.

- NZPA