Favourable credit rating confirmed for Whanganui District Council
Published on 09 August 2024
Global credit rating agency Standard and Poor’s has confirmed Whanganui District Council’s credit rating will remain unchanged at AA for the long-term and A-1+ for the short-term.
Whanganui District Council chief executive, David Langford, says the rating is 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.
“A strong credit rating has real world benefits as it reduces our borrowing costs, which ultimately benefits the ratepayer.”
The council’s chief financial officer, Mike Fermor, says that while the renewed credit rating is good news for Whanganui, the report also included a word of caution as it highlighted the difficult environment councils around the country are 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.”
A key reason given by Standard and Poor’s for the downgrade is councils having to take on increased debt levels just to deliver the basic infrastructure and services they are required to provide.
“This comes back to the high inflation pressures of the last few years we have all experienced,” Mike Fermor says.
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.
David Langford says the report highlights the very high credit ratings of New Zealand councils especially when compared to other countries, including the United Kingdom and France.
“This rating signals a continued vote of confidence in Whanganui District Council’s financial management from an organisation known globally for its independent credit ratings.”