S&P downgrades NZ’s outlook
(24 November 2010 – New Zealand) Credit ratings agency Standards and Poor’s has revised New Zealand’s credit rating outlook to negative, after months of positive credit changes.
The Australasian ratings firm has progressively improved New Zealand’s outlook since revising it from a negative outlook in May 2009, following the announcement of the 2009-10 budget.
Now the outlook is back to negative with Standards and Poor’s concerned about the external account and funding for banks and government entities.
The long-term foreign currency credit rating was affirmed at AA plus.
Under the S&P system, the outlook change implies a one in three chance of a downgrade in the medium term.
Sovereign credit analyst, Kyran Curry, said that the outlook revision on the foreign currency ratings reflect our recognition of the risks stemming from New Zealand's projected widening external imbalances in the context of the country's weakened fiscal flexibility.
'New Zealand's vulnerability to external shocks, arising from its open and relatively undiversified economy, also raises risks to the country's economic recovery and credit quality.'
He said positives for the economy include NZ's fiscal and monetary policy flexibility, strong institutions, economic resilience and its actively traded currency.
Now the outlook is back to negative with Standards and Poor’s concerned about the external account and funding for banks and government entities.
The long-term foreign currency credit rating was affirmed at AA plus.
Under the S&P system, the outlook change implies a one in three chance of a downgrade in the medium term.
Sovereign credit analyst, Kyran Curry, said that the outlook revision on the foreign currency ratings reflect our recognition of the risks stemming from New Zealand's projected widening external imbalances in the context of the country's weakened fiscal flexibility.
'New Zealand's vulnerability to external shocks, arising from its open and relatively undiversified economy, also raises risks to the country's economic recovery and credit quality.'
He said positives for the economy include NZ's fiscal and monetary policy flexibility, strong institutions, economic resilience and its actively traded currency.
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