Whanganui District Council’s long-term credit rating unchanged

Whanganui District Council chief executive David Langford said a strong credit rating had real world benefits as it reduced borrowing costs. Photo / NZME

Whanganui District Council has received a favourable credit rating but faces future financial difficulties alongside other New Zealand councils.

Global credit rating agency Standard and Poor’s confirmed the council’s credit rating will remain unchanged at AA for the long term and A-1+ for the short term.

Council chief executive David Langford said the rating was good news.

“In the report, Standard and Poor’s acknowledge Whanganui District Council’s strong financial management, particularly our prudent management of debt and cash flows.

“This recognition comes at a time when the council has had to navigate rising costs and chart a course to keep rates as affordable as possible while delivering the services our community expects.”

Council chief financial officer Mike Fermor said while the renewed credit rating was good news for Whanganui, the report also included a word of caution as it highlighted the difficult environment councils around the country were facing.

“This challenging environment is reflected in Standard and Poor’s ‘negative outlook’ downgrade to almost all of the New Zealand councils they rate.

“A ‘negative outlook’ doesn’t mean the credit rating has gone down – it simply means it could go down in the future if conditions don’t change.

“This comes back to the high inflation pressures of the last few years that we have all experienced.”

A key reason given by Standard and Poor’s for the downgrade is that councils are having to take on increased debt levels to deliver the basic infrastructure and services they are required to provide.

Another reason was current uncertainty around central government policy, making it difficult for councils to accurately predict future costs – for example, with Local Water Done Well drinking water, stormwater and wastewater reforms.

Langford said a strong credit rating had real world benefits as it reduced borrowing costs which ultimately benefited the ratepayer.