Waitakere City's increasing debt has prompted ratings agency Standard & Poor's to change the council's rating outlook to negative.
Standard & Poor's yesterday said it had affirmed its A+ long-term and A-1 short-term ratings on the city council.
However, the outlook on the ratings was revised to negative.
"The negative outlook reflects Waitakere City's increasing debt profile," said credit analyst Anna Hughes.
"The ratings could be downgraded in the next few years if Waitakere City's total borrowings continue to grow significantly."
Under the council's forecasts its net debt would peak at about 290 per cent of revenue in the 2009 fiscal year.
Standard & Poor's ratings on the council reflected the strong system support enjoyed by New Zealand councils, the council's adequate cash position, the absence of substantial council controlled trading organisation ownership, and the benefit of the greater Auckland region's strong economic base, Ms Hughes said.
The expectation was that Waitakere would not reach this forecast debt level. "However, even after factoring in capital under-expenditure of around 50 per cent, the council's debt burden could exceed 250 per cent of operating revenue within the next few years under a no-policy-change basis."
She said the outlook could be revised to stable if the council cut its forecast capital spending.
- NZPA
