18 July 2000

Christchurch’s Mayor, Garry Moore, says the confirmation of the high credit rating of City Council reflects the stability of the council’s finances.

He said that just as the public had confidence in the Council’s budgetary and administration so did external auditors. "I am delighted to see this result. It is important that we keep our financial credibility," Mr Moore said.

Standard and Poor’s today affirmed the City Council’s long-term local and foreign currency AA rating and its A-1+ short-term local and foreign currency rating.

The ratings on Christchurch City Holdings Ltd, the same as the rating for the City Council, were also affirmed.

The Council first obtained its AA rating in 1994.

Standard and Poor’s said the outlook on both the Council and CCHL remained as developing.

"The ratings reflect the City Council’s solid ongoing financial position, the structural diversity of the city’s economy, and its current moderate debt burden," said Rick Shepherd, the company’s director of public finance ratings.

The Council’s ongoing budgetary performance had been solid with a history of consistent operating surpluses and strong cash flow generation, Mr Shepherd said.

Funds from operation (FFO) generated had been strong, averaging about 15 per cent of operating revenue in the fiscal 1996-1999 period. That had contributed to strong net interest coverage results, he said.

The Council’s debt burden was moderate, but was projected to increase in the medium term, if the proceeds from the sale of the Orion gas network were not used for debt retirement, Mr Shepherd said.

In recent years, the core Council had increased capital expenditure significantly and its projections were for a continued sustained increased in the capital programme, he said.

Mr Shepherd said the "developing outlook " related to the uncertainly surrounding the disposal of the $550 million proceeds from the Orion sale.

Further information: Bob Lineham, Director of Finance: 941 8411