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ChCH City Council's strong AA+ credit confirmed

Christchurch City Council's strong AA+ credit rating confirmed

Confirmation by Standard & Poor's of Christchurch City Council's strong creditworthiness and stable outlook is gratifying, says CCC Strategic Investment Director Bob Lineham. In September, following news about Christchurch International Airport Ltd's (CIAL) terminal expansion, the rating agency put a "credit watch negative" rider on the Council's long-term rating, but today this caution was removed. Standard & Poor's looked at Council forecasts and says it believes "the forecast CIAL debt can be comfortably absorbed within the current rating".

Christchurch City Council aims for a rating of at least AA and it maintained this with S&P from 1994 to 2000. In 2001 it was lifted to AA+, the agency's second-highest ranking. It is an over-all rating which reflects the agency's outlook for both the CCC operations and for those of its holding company, Christchurch City Holdings Ltd. The Council's subsidiary companies are included because they form a substantial part of the over-all group finances.

"The AA+ rating reflects the Council's robust forecast operating position and strong fiscal flexibility provided by its capacity to control its revenue base," Standard & Poor's says. "Whilst the Council is forecasting operating deficits after capital expenditure from fiscal 2007, Standard & Poor's believes that the core Council forecasts are conservative and actual operating deficits after capital expenditure and net debt is unlikely to reach forecast levels."

Mr Lineham says few New Zealand local bodies achieve the double-A plus rating and S&P's confirmation of the Council's financial strength effectively means the organisation's debt financing can be done at comparatively lower interest rates. "The agency is clearly satisfied with what they have seen of the financial strength of the group," Mr Lineham says. "In the next few years we're moving into a period requiring an increase in borrowings, and this high rating means we'll be able to do that very competitively. The Council and CCHL are committed to undertaking important capital works for the benefit of the region and doing this on a financially sound basis."

? The Standard and Poor's media release about the CCC rating was released by the company's Melbourne office. It can be found at www.standardandpoors.com/au

? CCHL holds the city's interests in several trading companies, including CIAL, Lyttelton Port Company, Orion, Red Bus and City Card Ltd. More information about it is available on the web, at www.ccc.govt.nz/ChristchurchCityHoldings/

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