Skip to comments.New Zealand downgrade by S&P and Fitch
Posted on 09/30/2011 6:11:09 PM PDT by bruinbirdman
New Zealand's credit rating has been downgraded by two of the three major ratings agencies amid increased global concern over high debt burdens in developed nations.
Fitch and Standard & Poor's on Friday downgraded New Zealand from an AA+ rating to AA.
In the past, New Zealand has enjoyed strong sovereign credit ratings due to relatively low levels of government borrowing that offset worries about the country's high private debt.
However, the ratings agencies have become less sanguine after an earthquake and weak economic growth strained the government's finances.
The agencies are taking a harder line on any form of debt in the wake of the global financial crisis. Countries such as Ireland, which was forced to bail out banks after the global recession, have demonstrated how private debt can easily become a problem for the government.
In its review, Fitch said New Zealand's high level of external debt is "an outlier" among comparable developed nations, a situation which is likely to continue given that the current account deficit is projected to increase. A current account deficit typically shows that a country is spending more than it earns and relying on borrowing to make up the gap.
Standard & Poor's cited increased spending by the government following February's earthquake that killed 181 people and devastated the center of Christchurch, New Zealand's second biggest city.
According to S&P, negative factors include the country's high levels of household and agricultural debt, its reliance on commodities for income, and an aging population.
"Rising savings will be an important component for keeping the country's current account deficit in check," said S&P analyst Kyran Curry.
New Zealand has a poor track record of personal savings, something that recent governments have attempted to address with a voluntary retirement contribution scheme called KiwiSaver. The latest downgrade will
(Excerpt) Read more at telegraph.co.uk ...
More Hobbit movies then. Is the first behind schedule?
First USA lost their AAA rating, and now NZ loses their’s. Who’s next? This is all that’s left:
isle of man
I will guess either france or UK...I have to think about which one
Any country that elected a 50 IQ idiot like Helen Clark as PM deserves a knockdown. Let’s hope NZ citizens can get their kiwis in a row and fix the damage this moron Clark caused.
Barack Hussein Obama
Barack Hussein Obama”
I can’t disagree. Both the kiwis and Yankees got some work to do.
What do you get when you cross a Yankee with a kiwi?
I'm hoping to find out some day...