CREDIT RATINGS – AUSTRALIA

Government debt could hit $1trn by September

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Original article by Michael Read
The Australian Financial Review – Page: 4 : 8-May-25

Data from the Australian Office of Financial Management shows that the federal government’s gross debt is currently about $929bn. Micaela Fuchila, the chief economist at investment bank Jarden, has forecast that the nation’s gross debt will reach $1trn in either September or October of this year. The Treasury in turn expects the government’s net debt – which excludes the value of financial assets such as the Future Fund – to reach $556bn by June. S&P Global recently warned that Australia’s coveted AAA credit rating may be at risk if federal election spending promises are funded via debt rather than revenue or cost savings.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY. OFFICE OF FINANCIAL MANAGEMENT, JARDEN AND COMPANY, S&P GLOBAL INCORPORATED

Chalmers stakes future on staying AAA

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Original article by Greg Brown, Matthew Cranston
The Australian – Page: 1 & 6 : 30-Apr-25

Treasurer Jim Chalmers has downplayed concerns that Australia’s coveted ‘AAA’ credit rating may be downgraded. S&P Global has warned of this possibility due to election campaign promises and the growing use of so-called ‘off-budget’ spending. Chalmers says the federal govermment respects the global ratings agency and concedes that its "opinion matters". However, he adds that Labor’s "responsible economic management" means there would be no reason for a credit rating downgrade if it retains office on Saturday. The Australian Chamber of Commerce & Industry’s CEO Andrew McKellar says the S&P report is a "wake-up call" for both of the major political parties, and that budget repair must be a priority for the next government.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, S&P GLOBAL INCORPORATED, AUSTRALIAN CHAMBER OF COMMERCE AND INDUSTRY

PM scores AAA for denial

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Original article by Greg Brown, Matthew Cranston
The Australian – Page: 1 & 6 : 29-Apr-25

S&P Global has warned that Australia’s coveted ‘AAA’ credit rating is at risk due to the erosion of "sound fiscal management". The firm has raised concern about how the major political parties will fund their election promises if they win the election on 3 May, noting that the budget deficit could widen if the election promises are not funded via revenue or cost savings. S&P also expressed concern about the growing use of so-called ‘off-budget’ spending. However, Prime Minister Anthony Albanese has rejected suggestions that Australia could face a credit rating downgrade, while Treasurer Jim Chalmers says Opposition leader Peter Dutton and the Coalition are the biggest risk to the nation’s credit rating.

CORPORATES
S&P GLOBAL RATINGS, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY

S&P loses patience, warns of state downgrades

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Original article by Michael Read, Jonathan Shapiro
The Australian Financial Review – Page: 3 : 5-Feb-25

A report from S&P Global Ratings has concluded that the expenditure of Australia’s state and territory governments was $212bn higher between 2020 and 2023 than had been forecast in their 2019 budgets. This significantly offset the $146bn in revenue over the same four-year period. S&P forecasts that the combined debt of the states and territories will top $780bn by 2027, and the firm has warned they may face credit ratings downgrades unless action is taken to rein in spending.

CORPORATES
S&P GLOBAL RATINGS

Moody’s warns on Fortescue executive churn

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Original article by Peter Ker
The Australian Financial Review – Page: 12 : 20-Sep-23

Ratings agency Moody’s has reaffirmed its ‘Ba1’ credit rating for iron ore miner Fortescue Metals Group. However, Moody’s has warned that the high level of turnover within Fortesue’s executive ranks in the last several years could adversely affect the company’s credit rating. The firm also notes that the high level of stock ownership by Fortescue chairman Andrew Forrest increases governance risks, while it adds that looming final investment decisions on five clean energy projects may put further pressure on Fortescue’s balance sheet.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, MOODY’S INVESTORS SERVICE INCORPORATED

S&P warns of climate credit risks

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Original article by David Ross
The Australian – Page: 15 : 18-Jan-23

S&P Global Ratings says the severity and frequency of bushfires and floods facing Australia is increasing. The firm has warned that the credit ratings of the nation’s banks, insurers, and state and local governments could potentially be downgraded if this trend continues. S&P Global Ratings adds that insurers face the greatest risk from weather-related events, given that they are set to experience two successive years of large losses.

CORPORATES
S&P GLOBAL RATINGS

Alert on $45bn Labor spree

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 30-May-22

S&P Global Ratings has warned that the federal government’s "off-balance-sheet" election promises could potentially put Australia’s coveted AAA credit rating at risk. Labor announced nearly $45bn worth of spending commitments during the election, including its "rewiring the nation" program and funding for social and affordable housing. The ratings agency’s lead country analyst Anthony Walker says off-balance sheet spending is automatically included in its assessment of a nation’s financial position. Walker adds that further government spending risks fuelling inflation and more aggressive tightening of monetary policy.

CORPORATES
S&P GLOBAL RATINGS, AUSTRALIAN LABOR PARTY

BHP sale could hurt its credit rating

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Original article by Nick Evans
The Australian – Page: 17 : 25-Aug-21

S&P Global Ratings says BHP’s proposed deal to merge its petroleum division with Woodside Petroleum will further increase its reliance on iron ore and make its earnings less diversified than rivals such as Rio Tinto and Glencore. BHP currently has a credit rating of ‘A’ from S&P, which has put it on CreditWatch negative; S&P has also flagged the possibility that the Woodside deal could prompt it to downgrade BHP’s credit rating by two notches, to ‘BBB+’.

CORPORATES
BHP GROUP LIMITED – ASX BHP, WOODSIDE PETROLEUM LIMITED – ASX WPL, S&P GLOBAL RATINGS

AAA rating likely to be downgraded

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Original article by Michael Read
The Australian Financial Review – Page: 15 : 13-May-21

S&P Global Ratings placed Australia’s triple-A credit rating on negative outlook in April 2020, in response to the COVID-19 pandemic. The Commonwealth Bank has warned that Australia could potentially be downgraded to AA+ when S&P undertakes its annual review of the nation’s credit rating in September. Fixed income strategists Philip Brown and Martin Whetton attribute this to Australia’s rapidly growing net debt. However, ratings agencies are generally positive about Budget measures aimed at further stimulating the economy.

CORPORATES
S&P GLOBAL RATINGS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Moody’s sticks to AAA rating

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Original article by John Kehoe, Phillip Coorey
The Australian Financial Review – Page: 1 & 6 : 24-Jun-20

Moody’s Investors Service expects the Australian economy to contract by five per cent in 2020 due to the impact of the coronavirus pandemic. Moody’s notes that the fall in GDP growth will be lower than many other developed nations, and it expects Australia to return to positive growth in 2021. Moody’s has also affirmed Australia’s AAA credit rating; rivals S&P Global Ratings and Fitch have previously placed the nation’s credit rating on negative outlook, but Australia is only one of 10 nations that have an AAA rating from all three agencies. Treasurer Josh Frydenberg has described this as an "expression of confidence" in the federal government’s handling of the health crisis.

CORPORATES
MOODY’S INVESTORS SERVICE INCORPORATED, S&P GLOBAL RATINGS, FITCH RATINGS LIMITED, AUSTRALIA. DEPT OF THE TREASURY