Ratings firm takes city off negative credit-watch list

Standard & Poor's has removed a negative credit watch it imposed on Auckland's relatively high rating. Photo / Thinkstock

Auckland has more than survived a financial check-up by global credit rating agency Standard & Poor's.

The agency has affirmed an AA long-term credit rating for the city after reviewing its draft financial projections for the next 10 years.

That includes provision for a central-city rail tunnel, which the Auckland Council revealed last week had risen in estimated cost to $2.86 billion, as Mayor Len Brown began consultations on funding alternatives.

Standard & Poor's has, in a report made public by the council yesterday, removed a negative credit watch which it imposed on Auckland's relatively high rating after being told of the city's plans to lift its debt to pay for the rail link and other large development projects.

The agency is describing the outlook for the council's debt management as stable, with its credit ratings supported by several positive factors.

It lists these as a strong and diversified regional economy, strong council financial management, and a predictable and supportive institutional framework for local and regional governance in New Zealand.

It expects that despite an increasing debt burden, projected to increase from 120 per cent of annual revenue now to 198 per cent and rising in 2016, Auckland's credit credentials "will remain consistent with an AA rating".

Downward pressure on the ratings would come only after the city passed the 200 per cent mark - which it intends doing after 2016, towards a ratio of up to 250 per cent by 2023.

Chief financial officer Andrew McKenzie told the Herald last night that the council was now making annual payments of about $210 million - equal to 15 per cent of rates - on debt of $3.5 billion.