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S&P affirms Aust credit rating

Ratings agency Standard & Poor's has maintained its AAA credit rating for Australia, with a stable outlook.

Standard & Poor's has maintained its AAA sovereign credit rating for Australia.

The agency said the outlook for the rating also remained stable.

The high rating benefited from Australia's "significant fiscal and monetary policy flexibility, economic resilience, and public policy stability", S&P's credit analyst Craig Michaels said in a statement.

The global recession of 2009 showed that these factors give Australia resilience against large economic and financial shocks, he said.

But he also warned that Australia's high external imbalances, dependence on commodity exports and high household debt moderated those strengths.

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Unexpected changes in those factors could affect Australia's credit ratings, S&P said.

"We could lower the ratings if external imbalances were to grow significantly more than we currently expect, either because the terms of trade deteriorates quickly and markedly, or the banking sector's cost of external funding increases sharply," the agency said.

"Such an external shock could lead to a protracted deterioration in the fiscal balance and the public debt burden.

"It could also lead us to reassess Australia's contingent fiscal risks from its financial sector."

Treasurer Chris Bowen said S&P's annual report on Australia was a reflection of prudent economic management.

"This decision is further testament to the resilience of the Australian economy and the prudent economic management of the Labor Government," he said in a statement.

Australia is one of only eight countries to have a triple-A credit rating from all three major international rating agencies - S&P, Moody's Investors Service and Fitch Ratings.


2 min read

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Updated

Source: AAP


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