Praneeta Mahajan
Hamilton, October 12, 2023
Hamilton City Council still maintains a stable credit rating, but economic challenges are ahead as International credit rating agency Standard and Poor’s (S&P) has kept Hamilton City Council’s AA-credit rating but revised its long-term rating outlook to negative in a reflection of the financial challenges ahead.
The Council has consistently maintained its AA- rating annually, with the AA- score indicating the organisation has ‘very strong capacity to meet financial commitments.’
When The Council needs to take on a new debt, for major infrastructure or unexpected events, the AA- rating provides lenders with assurance that there is strong capacity to repay.
It also allows The Council to access lower interest rates on its borrowing through the Local Government Funding Agency.
Not all good news
The latest S&P report has noted that the Hamilton City Council’s financial forecast is below previous expectations, with operating surpluses roughly half of what was expected because of inflation, interest rates, and other costs outstripping its revenue growth.
The Council had decided in June 2023 to keep its average Rates increase at 4.9% despite increasing inflation and rising costs. During the COVID-19 pandemic, the Council voted to drop its average rate increase to as low as 2.8% to ease cost pressures for Hamiltonians.
At the same time, the Council is challenged to deliver a large capital programme to provide infrastructure for a growing city.
Hamilton City Council’s General Manager of Business Services, David Bryant, said the economic context is unprecedented.
“We are working on our 2024-34 Long Term Plan, which covers the next 10 years, and this will be an opportunity for the Council to reset its spending priorities. The city living within its means is a priority of the Council. This means ensuring the Council quickly gets back to a position where everyday expenses are paid for by everyday revenue.”
About Credit Ratings
Standard & Poor’s (S&P) Global Ratings provides credit ratings for more than one million government, corporate, financial sector and structured finance entities and securities around the world, including Hamilton City Council.
S&P analysts, managers and economists assess the factors and trends that affect creditworthiness. They are forward-looking opinions about the ability and willingness of debt issuers, like corporations or governments, to meet their financial obligations on time and in full.
They provide a common and transparent global language for investors and other market participants, corporations and governments, as one of the many inputs they can consider as part of their decision-making processes.
Praneeta Mahajan is an Indian Newslink reporter based in Hamilton.
