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Fitch reaffirms stable AA- rating for Council

Published: 07 Mar 2019

Timaru District Council has been given a good financial bill of health by one of the world’s largest rating agencies for the third time.

The council has again been given a rating of AA- with a stable outlook by Fitch Ratings. The credit rating is an assessment of an entity’s ability to pay its financial obligations.

The report says the council demonstrates the council had planned for stable financial performance with achievable financial forecasts offering a measured level of capital expenditure to upgrade key infrastructure and community assets.

The report also highlighted the strong financial management, saying the council’s management and governance are supported by clear policy guidelines and a detailed planning process.

Fitch has also viewed positively the recent reorganisation of council internal management structure to improve operational efficiency with refocused management of finance and projects.

The rating is said to reflect the strong institutional framework for local and regional councils in New Zealand, TDC’s sound management and fiscal performance, the stable local economic environment and moderate debt levels offset by large reserves and solid financial flexibility. It highlighted that Timaru's direct debt metrics continue to be one of the strongest of local Fitch-rated peers.

Mayor Damon Odey says that he’s pleased that the council has continued to be assessed independently as a well-run and fiscally robust organisation.

“The Fitch Ratings process involves them taking an intensive look at many different parts of the organisation, and I think the community can take comfort that they continue to view us as a strong and stable organisation,” he said.

“With the rating also comes clear guidelines about what the council can do to ensure it maintains its good rating, which can be used as to inform investment and lending decisions for the future.

“Receiving a rating such as this is thanks to the work of the elected members, council management and all staff. They have proven that a collaborative approach to working provides the best outcomes for our district.

“One direct benefit for ratepayers is that a strong credit rating can mean reduced borrowing costs, which can mean a lower cost over the length of loans for intergenerational infrastructure projects.”

Today’s release from Fitch Rating, which has more detail about the decision can be found here: https://www.fitchratings.com/site/pr/10063804

Publish Date: 07 Mar 2019