Council's credit rating stable

Last updated 11:49 15/11/2012

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Ratings agency Fitch has maintained Hamilton City Council's credit rating but advised any weakening in operating performance could trigger a downgrade.

Fitch Ratings Sydney has affirmed the council's long-term local currency rating at AA- and its short-term local currency rating at F1+.

It said the ratings remains stable.

Fitch Ratings' long-term credit ratings are assigned on an alphabetic scale from 'AAA' to 'D'.

Good credit ratings allow borrowing at more favourable interest rates than lesser ratings allow.Fitch's short-term ratings indicate the potential level of default within a 12-month period.

It ranges from 'F1+' (best quality grade) to 'D'.

The agency said the affirmation of Hamilton's ratings reflected New Zealand's strong institutional framework, improving budgetary performance, strong socio-economic profile and strengthened corporate governance.

Fitch said with the election of a new mayor and the appointment of a new chief executive officer, the council has improved its management and control processes significantly.

The agency also viewed the improved corporate governance had a strong impact on the council's long-term plan.''

Financial sustainability has improved as the new management team has a strong focus on tight cost control and debt management reflected through improving operating performance...'', the agency said.

Fitch said the council's long-term plan outlined the city's desire to limit operating expense growth while ensuring operating revenues are maximised.

Although the ratings outlook was stable, unexpected debt growth or weakening operating performance would trigger a downgrade.

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- Waikato


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