From The Australian comes news this afternoon that Western Australia has lost its prized AAA credit rating:
Ratings agency Standard & Poor’s said today it had lowered its rating for WA to `AA+’ from `AAA’, citing the government’s “limited political will” to cut spending.
It is the first time since 2003 that Western Australia has not had a AAA credit rating, which limits the cost of the state’s borrowings.
The move leaves Victoria as the only Australian state to have a AAA rating on a stable outlook…
“The lowering of WA’s long-term issuer credit rating reflects our view that while the fiscal action plan announced in WA’s fiscal 2014 budget improves the state’s path, in our view there is likely to be slippage, reflecting our view of limited political will, as evidenced by the early revision of some budget revenue and expenditure measures. As a result, WA’s credit metrics are likely to remain more consistent with an `AA+’ rating over the medium term.
…WA’s debt burden is now at the high end of the domestic peer group, and in our view is likely to continue rising.”
I am not surprised. Western Australia faces a difficult transition as the mining investment and commodity price booms unwind.
