From S&P:
Bulletin: Ratings On State of Western Australia Remain On CreditWatch Negative After Government’s Fiscal 2016 Budget
MELBOURNE (Standard & Poor’s) May 14, 2015—Standard & Poor’s Ratings Services said today that its ratings on the State of Western Australia (AA+/Watch Neg/A-1+) remain on CreditWatch with negative implications after the release of the state government’s budget for the year ending June 30, 2016.
We initially placed the ratings on Western Australia on CreditWatch negative on April 14, 2015, following the publication of our lower iron ore price assumptions.
The government’s fiscal 2016 budget also incorporates sharply lower iron ore price assumptions, resulting in large revenue write-downs over the next few years. Partially offsetting this revenue slump is the budget’s expectation
that the state will receive a larger share of Australia’s Goods and Services Tax (GST) revenue over time, compared to its previous assumptions. The GST forecasts reflect the methodology used in Australia to determine states’ GST
shares, which incorporates the impact of iron ore prices on Western Australia’s revenue-raising capacity. The government also announced some fresh revenue and savings policies to help offset these commodity-related revenue
falls, as well as new plans to sell assets.We will be reviewing our rating assumptions on Western Australia in light of the state’s budget, and expect to resolve the CreditWatch by around mid-July 2015.
