An AA rating is the highest rating the credit agency assigns to New Zealand local authorities.
The international credit rating agency says the Council's experienced financial management and strong financial position continues to support the ratings and that a supportive institutional framework, buoyant local economy and prudent financial management support Palmerston North’s creditworthiness.
PNCC Chief Financial Officer Grant Elliott says, "The Council has continued to keep its debt levels manageable, so it has scope to borrow in future for some of our necessary capital works outlined in the proposed 10 Year Plan currently out for consultation. One of the advantages of having a good credit rating is that it enables Council to borrow money on more favourable terms, which in turn can save ratepayers' money."
S & P Global’s report states that Palmerston North’s strong financial position has benefited from its solid budgetary performance. Since 2011, the council has averaged after-capital account surpluses of 4.6 percent of total revenues. However the report notes that in future as a result of after-capital account deficits and higher capital spending, they project Palmerston North’s debt metrics to weaken slightly through to 2020.
S&P Global draws attention to the Council’s under-delivery of it budgeted capital expenditure programme and that despite efforts to improve there has been no significant improvement. “Improved delivery of the capital expenditure programme is a significant focus for the Council at the present time,” says Mr Elliott.
The previous assessment undertaken by S & P Global was in April 2017.
The AA part of the assessment relates to Council’s long term debt and the AA-1+ part to short term debt.