Auckland City Council
Media release

1 May 2009

Standard and Poor’s announcement regarding Auckland City Council’s credit rating

Auckland City Council’s local currency ratings were affirmed ‘AA/A-1+’ by Standard & Poor’s Ratings Services today, however the outlook has been reduced from stable to negative.

In a media release earlier today, Standard and Poor’s said:”The outlook on these ratings were revised to negative, from stable, reflecting the likely change in governance structure of the greater Auckland area.”

Standard & Poor’s assessment is that the credit quality of the merged Auckland Council may be equal to or slightly weaker than that of Auckland City Council.

Councillor Douglas Armstrong, chairperson of Auckland City Council’s Finance and Strategy Committee says the revised negative outlook does not adequately reflect the benefits of the proposed changes to regional governance.

“The new council will be subject to the same legislative controls to operate in a financially prudent manner as the current council, which has a strong cash operating surplus and low-risk operations.

“Another factor to consider is that the new council will not only retain the ability to rate but that the rating base will be almost three times the size of Auckland City Council’s,” said Mr Armstrong.

Auckland City Council does not expect that this announcement will have a significant impact on its cost of funds.

Auckland City Council's latest 10-year plan, which is available for public consultation until 18 May, proposes a lower level of investment than previously planned for the next 10 years, whilst signalling a $494 million investment for the 2009/2010 financial year.

ENDS

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