CREDIT RATINGS – AUSTRALIA

Morrison on notice as debt soars

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Original article by David Uren
The Australian – Page: 1 & 4 : 13-Dec-16

Ratings agency Moody’s has forecast that the combined debt of Australia’s federal and state governments will rise to about $A690bn by mid-2017, compared with $A642bn in June 2016. Treasurer Scott Morrison will release the mid-year economic and fiscal outlook on 19 December, and Marie Diron of Moody’s says the Government is likely to reduce the deficit but at a slower pace than forecast in the May 2016 Budget. Moody’s is not expecting to downgrade Australia’s triple-A credit rating, although rival S&P Global Ratings put it on "negative watch" earlier in 2016.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, MOODY’S INVESTORS SERVICE INCORPORATED, S&P GLOBAL RATINGS, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, DELOITTE TOUCHE TOHMATSU LIMITED, AUSTRALIAN LABOR PARTY, AUSTRALIA. DEPT OF EDUCATION AND TRAINING

Losing triple-A rating inevitable: Hewson

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Original article by Simon King
The Australian – Page: 4 : 5-Dec-16

The former leader of the Liberal Party of Australia, John Hewson, believes that it is a matter of when rather than if the nation’s "AAA" credit rating is downgraded. Hewson adds that it will be a challenge for the Federal Government to achieve a Budget surplus by the end of the decade, and argues that neither of the major political parties have policies that will achieve this outcome.

CORPORATES
LIBERAL PARTY OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, STANDARD AND POOR’S FINANCIAL SERVICES LLC, AUSTRALIAN LABOR PARTY

Super win sparks stoush

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Original article by Phillip Coorey, Joanna Mather
The Australian Financial Review – Page: 1 & 8 : 24-Nov-16

Federal Treasurer Scott Morrison has ruled out further changes to superannuation after the Senate passed tax reforms that had been announced in the May 2016 Budget. The changes that take effect on 1 July 2017 include restricting annual concessional contributions to no more than $A25,000 and imposing a $A1.6m cap on super retirement accounts. The reforms are expected to generate total savings of $A3bn over four years. However, the Government has stressed the need for a further $A20bn of Budget repair measures if the nation is to retain its "AAA" credit rating.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSION, S&P GLOBAL RATINGS

S&P warns deficit must not blow out

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 4 : 23-Nov-16

Craig Michaels of S&P Global Ratings says the Federal Government must return the Budget to surplus by 2020-21 if Australia is to retain its triple-A credit rating. He warns that a rating downgrade is possible if a return to surplus is further delayed, noting that a surplus had been forecast by the former Australian Labor Party government for 2012-13. Michaels also notes the domestic economy’s high reliance on foreign lenders continuing to finance the structural current account deficit.

CORPORATES
S&P GLOBAL RATINGS, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, DELOITTE ACCESS ECONOMICS PTY LTD, McKINSEY AND COMPANY, GREAT BRITAIN. OFFICE OF THE PRIME MINISTER, RESERVE BANK OF AUSTRALIA

Banks on S&P negative watch over hot property

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 11 & 15 : 1-Nov-16

Factors such as rising household debt and residential property prices have prompted Standard & Poor’s to downgrade Australia’s economic risk trends. The firm has also downgraded the credit rating outlook of 25 local lenders to "negative". S&P downgraded the major banks’ rating outlooks to "negative" in mid-2016, but it has not yet made any further changes. However, their "AA-" credit ratings could be reviewed, particularly if Australia implements new global regulations regarding bank bailouts.

CORPORATES
STANDARD AND POOR’S CORPORATION, MACQUARIE BANK LIMITED – ASX MBL, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, BANK OF QUEENSLAND LIMITED – ASX BOQ, RESERVE BANK OF AUSTRALIA

Markets expect cool response to downgrade

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Original article by David Uren
The Australian – Page: 6 : 21-Oct-16

Borrowing costs for Australian banks and the state and federal governments have not increased as a result of S&P Global Ratings’ downgrading of the nation’s credit rating outlook to negative earlier in 2016. The loss of Australia’s "AAA" credit rating would also be unlikely to have an impact on borrowing costs, according to some financial market watchers. Treasurer Scott Morrison maintains that the Federal Government’s budget repair strategy is crucial to retaining the coveted triple-A credit rating. Australia also has a triple-A rating from Moody’s Investor Services and Fitch Ratings.

CORPORATES
S&P GLOBAL RATINGS, AUSTRALIA. DEPT OF THE TREASURY, MOODY’S INVESTORS SERVICE INCORPORATED, FITCH RATINGS LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, DEUTSCHE BANK AG, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Fear grows AAA rating to be lost

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Original article by David Uren
The Australian – Page: 1 & 5 : 20-Oct-16

Treasury secretary John Fraser has warned that every Australian would be affected by a downgrade of the nation’s "AAA" credit rating. The Federal Government is hopeful that the mid-year budget update will feature a modest decline in the deficit, although there are concerns that this may not be sufficient to avert a rating downgrade. Craig Michaels of S&P Global Ratings has reiterated the need for the Government to implement budget savings measures. Meanwhile, Treasury is not expected to take into account the recent rise in coal prices when preparing economic forecasts for the mid-year update.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, S&P GLOBAL RATINGS, AUSTRALIAN LABOR PARTY, NICK XENOPHON TEAM

Foreign debt levels ‘extreme’

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Original article by Adam Creighton
The Australian – Page: 1 & 5 : 10-Oct-16

John Chambers, who heads the sovereign ratings committee of Standard & Poor’s, has warned that Australia’s "AAA" credit rating may be at risk. He has expressed concern about the nation’s rising net foreign debt, noting that it is among the worst of the 130 sovereign nations that the firm rates. S&P downgraded Australia’s credit rating outlook to "negative" in July 2016. Rival rating agencies have also previously expressed concern about Australia’s fiscal position.

CORPORATES
STANDARD AND POOR’S CORPORATION, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, RESERVE BANK OF AUSTRALIA, MOODY’S INVESTORS SERVICE INCORPORATED, FITCH RATINGS LIMITED, AUSTRALIAN BUREAU OF STATISTICS, AUSTRALIA. PARLIAMENTARY BUDGET OFFICE, AUSTRALIA. DEPT OF FINANCE, AUSTRALIAN GREENS, WORLD BANK, INTERNATIONAL MONETARY FUND

BHP Billiton makes debt key priority

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Original article by Peter Ker
The Australian Financial Review – Page: 17 & 20 : 18-Aug-16

BHP Billiton’s net debt topped $US26.1bn ($A34bn) in 2015-16, which is its highest level in three decades. However, CEO Andrew Mackenzie believes that the resources group’s debt is unlikely to rise any further in the near-term, and he has identified reducing debt as one of its priorities. Meanwhile, Matthew Moore of Moody’s says the ratings agency has retained BHP’s negative outlook, and he has warned that the group’s "A3" credit rating could be downgraded if it does not make progress in improving its credit metrics.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, MOODY’S INVESTORS SERVICE INCORPORATED, RIO TINTO LIMITED – ASX RIO, STANDARD AND POOR’S CORPORATION, DEUTSCHE BANK AG, SAMARCO MINERACAO SA, ANGLO AMERICAN PLC

Moody’s issues bleak outlook for banks

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 19 : 15-Jul-16

Australian banks are likely to experience pressure on their profit margins because of low interest rates. Frank Mirenzi of Moody’s states in a report released on 14 July 2016 that household debt has increased as a result of rising house prices and low income growth. At present, the big four banks have an "Aa2" rating from Moody’s and an "AA-" rating from Standard & Poor’s.

CORPORATES
MOODY’S INVESTORS SERVICE INCORPORATED, STANDARD AND POOR’S CORPORATION, RESERVE BANK OF AUSTRALIA, HSBC BANK PLC, WELLS FARGO AND COMPANY, BNY MELLON ASSET MANAGEMENT AUSTRALIA LIMITED