Auckland Council has retained its strong credit ratings from international agencies Moody’s Investor Service and Standard & Poor’s.
Both Moody’s and Standard & Poor’s reaffirmed the council’s credit ratings as Aa2 and AA respectively, with a stable outlook from both.
The reaffirmed ratings reflect the strength of council’s debt servicing ability, acting Group Chief Financial Officer Matthew Walker says.
“Our financial strategy sets limits on the council’s borrowing to maintain debt at a sustainable level,” Mr Walker says. “While total group debt is projected to reach $11.6 billion by 2025, it will still remain at a prudent level in comparison to our annual income of $5.4 billion, by 2025.”
The council considers this increase in debt to be appropriate on the basis that it is primarily driven by investment in new assets and the benefit of the expenditure is spread over time, thereby promoting inter-generational equity – costs are shared with those that benefit from the assets, he says.
Looking forward to new assets
Late last month, Auckland Council's Governing Body adopted the 2015/16 Annual Report which showed highlights from the that financial year, including investments in infrastructure and the city's growing population. This included spending $1.4 billion on capital works.
Since amalgamation, the council has seen a population increase equal to the entire population of Tauranga - about 130,000 people.
This coming year, the council will commence its review of the Long-term Plan, to take effect in the 2018/19 financial year, which allows the city to establish clear borrowing and investment policies and provides a clear strategy for the next 10 years, Mr Walker says.