State spending plans attract rating cut

SYDNEY: Queensland's long-term local currency rating was cut to AA+ by Fitch ratings yesterday on concern at the state government's spending plans.

"The state's current budget and financial projections through 2012-2013 indicate a reduction in financial flexibility as the state embarks upon an ambitious and sustained infrastructure investment programme," Fitch said. "Planned infrastructure investments are likely to position the state well for continued population growth and for a pending economic recovery."

Fitch affirmed the state's long-term foreign currency rating and its short-term foreign and local ratings.

Queensland Treasurer Andrew Fraser said on June 16 that the state would use a federal Government guarantee to cover its existing local currency-denominated benchmark bonds with maturities between 12 months and 15 years.

- BLOOMBERG