Council woes trigger dip in credit rating

The creditworthiness of Christchurch City Council and Christchurch City Holdings has been downgraded for the second time in eight months by international credit rating agency Standard & Poor's.

The new credit rating of A+, with a negative outlook, from AA-, with a negative outlook, reflected S&P's view of Christchurch's "weakened management arising from the revocation of the council's building consenting powers, the appointment of a Crown manager, and departure of multiple senior staff," S&P said yesterday.

An AAA rating is the highest rating and indicates an extremely strong capacity to meet financial commitments. AA indicates a very strong capacity to meet financial commitments and an A rating indicates a strong capacity to meet financial commitments - but "somewhat susceptible to adverse economic conditions and changes in circumstances".

The negative outlook indicates that the rating could be downgraded further in future, and S&P said it reflected its view of heightened legal risk arising from:

The council's consenting issues for building approvals.

The risk that further issues could emerge.

The potential for the council's debt burden to rise above 180 per cent of revenues either due to reconstruction cost overruns or the realisation of current contingent liabilities.

Council general manager corporate services Paul Anderson said the rating change reflected "temporary factors" the council was working with the Crown to address.

The Press