Council’s strength confirmed
Confirmation by Standard & Poor’s of the City Council’s strong creditworthiness and stable outlook is gratifying, says CCC Strategic Investment Director Bob Lineham.
In September, following news about Christchurch International Airport Ltd’s (CIAL) terminal expansion, the rating agency put a “credit watch negative” rider on the Council’s long-term rating, but this caution was removed last month. Standard & Poor’s looked at Council forecasts and said “the forecast CIAL debt can be comfortably absorbed within the current rating”.
CCC aims for a rating of at least AA and it maintained this with S&P from 1994 to 2000. In 2001 it was lifted to AA+, the agency’s second-highest ranking. It is an over-all rating which reflects the agency’s outlook for both the CCC operations and for those of its holding company, Christchurch City Holdings Ltd. The Council’s subsidiary companies are included because they form a substantial part of the over-all group finances.
“Whilst the Council is forecasting operating deficits after capital expenditure from fiscal 2007, Standard & Poor’s believes that the core Council forecasts are conservative and actual operating deficits after capital expenditure and net debt is unlikely to reach forecast levels,” the agency said.
Mr Lineham says few New Zealand local bodies achieve the double-A plus rating and S&P’s confirmation of the Council’s financial strength effectively means the organisation’s debt financing can be done at comparatively lower interest rates.
“The agency is clearly satisfied with what they’ve seen of the financial strength of the group,” Mr Lineham says. “In the next few years we’re moving into a period requiring an increase in borrowings, and this high rating means we’ll be able to do that very competitively. The Council and CCHL are committed to undertaking important capital works for the benefit of the region and doing this on a financially sound basis.”
- CCHL holds the city’s interests in several trading companies, including CIAL, Lyttelton Port Company, Orion, Red Bus and City Care Ltd. More information about it is on the web, at www.ccc.govt.nz/ChristchurchCityHoldings/
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