Rating agency affirms regional council's AA/A-1+ credit rating
Credit rating agency Standard and Poors/Rating Direct has affirmed Greater Wellington Regional Council's AA/A-1+ outlook stable credit rating, saying that any significant damage resulting from natural disaster such as earthquake has a small likelihood of affecting the council's credit profile.
The agency singled out the regional council's very strong financial management and economy, strong liquidity and low contingent liabilities as key reasons for affirming its rating. It adds that the regional council's outlook remains stable, reflecting its ability to deliver its major capital projects - such as investment in infrastructure and public transport - while maintaining the council's strong liquidity.
Contingent liabilities were also described as low and fully consolidated into the regional council's accounts.
While the region is exposed to earthquake risk, the agency considered that any significant damage arising from a natural disaster such as an earthquake had a small likelihood of affecting the regional council's credit profile.
It stated that "the recent earthquake on 14 November 2016 affected the main council building and a few CentrePort owned buildings, however we expect the impact to the council's balance sheet to be minimal given the comprehensive insurance policies in place."
In a related rating WRC Holdings Limited, which is wholly-owned by the regional council, retained its AA/A-1+ outlook stable rating. In its report the agency stated that "there is an almost certain likelihood that extraordinary support would be forthcoming from its sole owner Greater Wellington in a distress scenario."
Greater Wellington Regional Council chair Chris Laidlaw welcomed the report, describing it as a vote of confidence for the regional council's strong financial management.
"Our mandate is to deliver critical public transport, infrastructure and environmental services to the region at fair value and without financial risk. It is comforting that, especially in difficult times such as these, independent research shows that the community can have full confidence in our financial management.
"It is also pleasing to note that the rating agency describes the outlook as stable. We wholly agree. Despite recent knock backs arising from the earthquake we have strong revenue and a balance sheet which will only be minimally affected.
"CentrePort also has solid insurance cover that will play a key role in the redevelopment of the port.
"Overall, the Standard and Poors/Rating Direct report shows that Greater Wellington Regional Council is in good financial heart and that its strong position complements the positive Wellington regional economy," says Cllr Laidlaw.
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