The international agency last week reaffirmed the City Council’s AA credit rating – which allows the Council to borrow at low interest rates and thus save significant amounts of money.
“We view Wellington City's stand-alone credit profile to be higher than the New Zealand sovereign, but have capped the ratings at the sovereign level,” the S&P review says.
S&P perceives the institutional framework within which New Zealand local government operates “as being one of the strongest and most predictable globally.
“This provides a source of credit strength that allows Wellington City to support higher debt burdens than some of its international peers can tolerate.
“We consider [the level of indebtedness] to be average to below average among New Zealand councils.”
The City Council has “very strong financial management and budgetary flexibility, strong budgetary performance and liquidity and low contingent liabilities”.
Councillor Justin Lester, the Chair of the Council’s Governance, Finance and Planning Committee, says Council Chief Executive Kevin Lavery, his senior managers and finance team deserve congratulations for the rating report.
“It really is a huge endorsement of what Standard and Poor’s calls the Council’s excellent financial management.”
Cr Lester says S&P considers the Council’s asset-management strategies to be sophisticated and that they are inextricably linked to the Council’s financial management tools.
Mayor Celia Wade-Brown says Standard and Poor’s “rightly” points out that future credit ratings will depend on decisions made in the Council’s upcoming Long-Term Plan.
“I welcome the view that Wellington City’s credit strength and institutional framework will allow higher debt burdens as we progress our strategy to invest in projects to grow the Capital’s economy. Wellington’s debt profile compares favourably with other councils in New Zealand, so we’re in a strong position to invest,” she said.
“This praise from Standard and Poor’s matches the recent comments by the deputy Auditor General that Wellington City is a ‘shining exemplar’ for infrastructure management.”