Our credit rating ‘AA with a Stable Outlook’ reaffirmed
Published on 06 September 2024
In August 2024, credit rating agency Standard & Poor’s (S&P) reaffirmed Whangarei District Council’s credit rating of ‘AA with a Stable Outlook’.
Whangārei Mayor Vince Cocurullo says this is a very pleasing result, given the difficult financial environment and the pressure on local government ratings across New Zealand.
“This AA rating puts our Council among the highest-rated organisations in New Zealand. By comparison, the major retail trading banks have ratings of AA-, while Fonterra sits at A-. We are in an extremely strong financial position, with much lower debt compared to other councils, and are in a great place to respond to challenges like the water reforms.
“This rating gives the Local Government Funding Agency, banks, and other funders a very clear picture of our financial soundness, so they can determine how safe we are to lend to and how much interest we pay on borrowing. The better our credit rating is, the lower interest rates are that we are charged on our debt. This equates to savings for our ratepayers.”
He says the credit rating process provides a “hardnosed independent commercial assessment” of WDC’s financial position, financial policies and management capability.
“S&P say the manufacturing sector’s contribution to the local Gross Domestic Product (GDP) fell to about 8 per cent, from over 20 per cent between 2022 and 2023. The economy is well diversified, with no single industry contributing more than 11 per cent of the GDP drop in 2023.
“The agency also supported Council’s recent Long Term Plan, saying that, while rising construction costs will affect Council’s budget, these should be offset by increases in rates revenue.
“While the ‘Stable Outlook’ indicates that Whangārei's strong financial management will keep the District financially healthy, S&P emphasised that we need to follow the Financial Strategy set out in the 2024-34 Long Term Plan – particularly in relation to the proposed rates rises, containment of costs and debt management. We could face a future downgrade if we fail to do so.”
He said that, while the long-term plan process had been challenging, it was reassuring to receive a robust, independent assessment, “that confirms the wisdom in some of our more difficult calls”.