Can S&P strip the AAA during the bulk boomlet?

Australia could be stripped of its top credit score by S&P Global Ratings as early as next month if the government’s interim budget review shows further deterioration, according to BlackRock Inc.

The mid-year economic and fiscal outlook, which for the past three years has been delivered in December, could be a “catalyst” for the country to lose its AAA rating, said Stephen Miller, the Sydney-based head of Australian fixed income at the world’s largest money manager. Australia is currently the highest yielding issuer among 10 nations with top ratings from the three major assessors, and a downgrade could lessen the appeal of Aussie debt for international investors who hold the majority of the country’s sovereign notes.

The Australian government has struggled to rein in its fiscal shortfall as lower commodity prices have crimped revenues and parliament has stymied savings measures. The budget has been in deficit since 2008 and isn’t forecast to return to surplus until at least 2021, according to the fiscal plan released in May. An election in July failed to break the legislative gridlock, prompting S&P to shift its outlook to negative and warn of a possible rating cut.