Press Release - AAA Again For Australia [17/02/2003]
NO.005
AAA AGAIN FOR AUSTRALIA
Australia's AAA credit rating has been restored today by the international
credit ratings agency, Standard and Poor's, finally closing the chapter on Paul
Keating's infamous `Banana Republic'. Australia's foreign currency credit rating
was downgraded in 1986 and 1989, under the previous Labor Government. It has
now been returned to the AAA level.
Today's announcement means that both of the major ratings agencies have restored
Australia's foreign currency credit rating to the highest possible level. Moody's
upgraded Australia to Aaa late last year, a rating that was downgraded in 1986
and further in 1989.
S&P attributed today's upgrade to the Government's strong fiscal position
and to the good financial standing and sophisticated risk management practices
of the private sector.
Referring to Australia's public finances, S&P said that "Australia
has one of the strongest fiscal positions, including `AAA' rated sovereigns"
and that "net general government debt to GDP is projected to fall to 3 per cent
at year-end 2003 from 20 per cent seven years before."
And with respect to the private sector, S&P says that Australia's reliance
on foreign savings is "mitigated in S&P's view by the high credit standing
of Australia's major banks, by the depth of the foreign exchange and derivatives
markets for Australian dollars, and by substantial claims on non-residents by
the Australian private sector from hedging activities, which are not captured
in a traditional International Investment Position presentation."
Today's upgrade applies to Australia's foreign currency borrowings. The Commonwealth
domestic currency borrowings have always been rated AAA.
The ratings upgrade places Australia with sixteen other countries on the AAA
rating: Austria, Canada, Denmark, Finland, France, Germany, Ireland, the Isle
of Man, Liechtenstein, Luxembourg, the Netherlands, Norway, Singapore, Switzerland,
the United Kingdom, and the United States.
While the Commonwealth has not borrowed in net terms since 1997, the benefits
of today's ratings upgrade will be realised by Australia's private sector companies
which will be able to borrow more cheaply in foreign markets. This will help
underpin growth and help create job opportunities.
Contact: Niki Savva
02 6277 7340