SYDNEY: Moody’s Investors Service has reaffirmed Auckland Council’s Aa2 credit rating on a stable outlook.
Auckland Council s Group Chief Financial Officer Matthew Walker says that the rating reaffirms that the council is prudently managing its borrowings as it embarks on an ambitious infrastructure programme to cater for unprecedented population growth.
“I am pleased that our financial management has again been recognised by Moody’s. Auckland Council continues to uphold one of the highest credit ratings in the country, after the government”.
Moody’s noted that the stable outlook reflects the council’s healthy gross operating balance and robust local economy and the Crown’s well-established institutional framework for local governments.
Moody’s also noted the council s strong operating cash flow, which enables a significant proportion of capital spending to be funded from surplus operating cash flow.
The Council’s high debt burden — as measured by net debt and indirect debt as a percentage of operating revenue — at 242% for the fiscal year ended 30 June 2018 (FY2018) — limits its ability to deliver its large infrastructure spending program without a material increase in debt.
This situation is partly mitigated by its strong relationship and close alignment with the Crown and work underway to develop alternate funding strategies with the Crown and private sector to build new infrastructure for the growing population, and meet social and economic needs.
Moody’s also notes the strong operating cash flow of the Council, which enables roughly 80% of capital spending to be funded from surplus operating cash flow, as evidenced in FY2018, when only 8% of capital spending was funded by new debt.
The Auckland Council is the local government council for the Auckland Region in New Zealand. The governing body consists of a mayor and 20 councillors, elected from 13 wards. There are also 149 members of 21 local boards who make decisions on matters local to their communities.[the_ad id=”31605″]