New Zealand is a long way from being grouped with Europe's heavily indebted nations known as the PIIGs despite worrying levels of external debt, according to Kyran Curry, the Standard & Poor's analyst who kept the sovereign rating at AA+ with a negative outlook.

S&P last week reaffirmed the country's sovereign credit rating after Finance Minister Bill English's budget, citing the poor state of the country's external indebtedness for keeping the outlook negative.

Figures from the budget show the country's net international investment position, or total debt including government and private, was an estimated 78.6 per cent of gross domestic product in the year ended March 31.

That ranks New Zealand alongside Portugal, Italy, Ireland, Greece, and Spain, Europe's PIIGS.

"What separates New Zealand is that the financial institutions like the Reserve Bank are independent, and it has a floating currency," Kyran Curry, a sovereign ratings analyst at S&P, told BusinessDesk. "The economy is forecast to recover strongly. The numbers are credible and believable whereas there are some questions marks over the data from the southern European sovereigns."

New Zealand has the ability to depreciate its currency in the face of bad news, a strategy not available to Europe's troubled states who share euro currency with economic giants such as Germany and France, Curry said. That inability to control monetary policy has stoked speculation the Greece wants to ditch the euro.

The market is highlighting that difference in the price of government bonds. New Zealand's benchmark 10-year bonds yield 5.18 per cent - compared to 9.2 per cent for comparable Portugese debt, 10.5 per cent for Ireland and 16.6 per cent for Greece.

Still, New Zealand's high total indebtedness raises a red flag with ratings companies, because they are paying more attention to countries' total weight of debt under new methodologies.

Debt held outside New Zealand's sovereign account makes up 75 per cent of the nation's overseas debt, so the government's 25 per cent doesn't carry the same weight of influence in financial markets.

Curry said the latest Budget projections returning the government to fiscal surplus by 2015 will close the gap somewhat, it does not address the overhang, Curry said."We are starting to see some good strategies but they need to restore the financial buffer to cope with any unforeseen shocks," Curry said. "The New Zealand sovereign is still exposed on the external side.

"Finance Minister Bill English, speaking ahead of his visit to Hong Kong and Singapore, where he will pitch New Zealand as an attractive investment destination, characterised the Budget as a move towards boosting national savings by returning the country to surplus as soon as possible."

"Compared to the outlook of most developed countries, this is a strong economic story, which I am keen to share," English said. "I am confident the investment and business communities in Singapore and Hong Kong will understand the significant progress we are making in turning around New Zealand's high levels of debt and lifting national savings.

"Progress towards this goal will be watched closely by ratings agencies, and reflected in the country's credit rating."It's not for us to judge to see if this is achievable but it has some credit," said Curry. "The New Zealand government has a history of generally achieving what it says they're going to."