Council Keeps Favourable Credit Rating
Hamilton City Council’s positive credit rating has been reaffirmed by international agency Standard & Poor’s.
Council has maintained its AA- long-term credit rating, which indicates the organisation is in a ‘very strong’ position to be able to meet its financial commitments.
A credit rating is an independent assessment of an organisation’s capacity to honour its debt repayments. The Council uses debt to pay for major new infrastructure projects and to cover significant costs to look after existing city assets.
Finance Committee Chair Councillor Rob Pascoe said the AA- rating is recognition of the Council’s strong economic outlook and financial management.
“Maintaining our strong credit rating during a global pandemic that’s impacted our city’s economy considerably is a significant achievement for Council.
“The commentary from Standard & Poor’s specifically mentions Council’s prudent limits on borrowing as set in our Financial Strategy and the careful monitoring of our capital expenditure as contributing to the rating.”
In addition to providing a favourable assessment of Council’s books, the AA- rating has a tangible benefit to ratepayers. The AA- score gives Council access to lower interest rates on its borrowing through the Local Government Funding Agency.
The rating was the first by Standard & Poor’s after Council opted in March 2020 to change from Fitch Ratings for its financial performance review.
“Standard and Poor’s are the credit rating provider for 24 of the 30 councils that have chosen to have a credit rating,” said Councillor Pascoe. “So, they have a strong understanding of the New Zealand local government sector, especially high-growth councils such as Hamilton.”
In its final assessment, released on 30 September, Fitch also scored Council AA-.