Fitch matches AAA ratings
(30 November 2011 – Australia) Fitch Ratings upgraded Australia’s foreign currency issuer default rating to AAA from AA+, on the country’s strong economy, political institutions and flexible policy.
Fitch’s Asia Sovereign Ratings group director Art Woo said the ratings upgrade reflected Australia’s fundamental strengths, "including its high value-added economy, strong political, civil and social institutions and its flexible policy framework."
Fitch also affirmed Australia’s local currency rating of AAA with a stable outlook.
Fitch joined global ratings agencies Standard & Poor’s and Moody’s in giving Australia the highest possible investor rating.
Fitch said it viewed Australia’s low government debt-to-GDP ratio, 26.3 percent of GDP in 2010-11, as one of the standout strengths. In comparison, the median ratio in the AAA rating group was 55.7 percent.
The ratings agency said the federal government was committed to getting the budget back to surplus by 2012-13, although that could be delayed by a further deterioration in global economic conditions.
Australia’s external finances remained weak by AAA standards, although not the worst among ratings peers, Fitch said.
The commodity boom was helping Australia’s growth rate, even during the financial crisis. But Fitch said the boom also posed risks, as a large downturn in key commodity prices would lead to a sharp reversal in the terms of trade.
Household debt was also high in Australia, after the run-up in housing prices over the last decade and a half.
House prices had been moderating since mid-2010, which should ease concerns that a large bubble had developed, Fitch said.
Fitch also affirmed Australia’s local currency rating of AAA with a stable outlook.
Fitch joined global ratings agencies Standard & Poor’s and Moody’s in giving Australia the highest possible investor rating.
Fitch said it viewed Australia’s low government debt-to-GDP ratio, 26.3 percent of GDP in 2010-11, as one of the standout strengths. In comparison, the median ratio in the AAA rating group was 55.7 percent.
The ratings agency said the federal government was committed to getting the budget back to surplus by 2012-13, although that could be delayed by a further deterioration in global economic conditions.
Australia’s external finances remained weak by AAA standards, although not the worst among ratings peers, Fitch said.
The commodity boom was helping Australia’s growth rate, even during the financial crisis. But Fitch said the boom also posed risks, as a large downturn in key commodity prices would lead to a sharp reversal in the terms of trade.
Household debt was also high in Australia, after the run-up in housing prices over the last decade and a half.
House prices had been moderating since mid-2010, which should ease concerns that a large bubble had developed, Fitch said.
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