A strong credit rating for Rotorua Lakes Council should give ratepayers comfort that its financial affairs are being well monitored, according to the mayor.
The council has been given an internationally recognised credit rating of AA- by Fitch Ratings, one of the top three credit rating agencies in the world.
The high rating means the council is seen as having a very low risk of default, a strong capacity for payment of financial commitments and its capacity is not significantly vulnerable to foreseeable events.
The council sought the credit rating to ensure even greater control of its financial management and decision-making.
Council chief executive Geoff Williams said achieving such a good rating was a significant milestone.
"It will provide council with greater access to more competitive borrowing rates and provide more flexibility when raising loans, including potentially cheaper loan funding.
"We're not looking to increase borrowing but it will help reduce the cost of borrowing in future."
It is estimated the council will save up to $300,000 a year in the long term as debt matures and the rating allows access to better interest rates.
Fitch Ratings is one of three internationally recognised credit rating agencies used in New Zealand along with Standard & Poor's and Moody's.
Rotorua mayor Steve Chadwick said the credit rating was a major step forward for the council and would bring even greater discipline to the council's financial management and decision-making.
"Every financial decision we now consider we must factor in what effect it might have on our AA- rating.
"Following on from the PricewaterhouseCoopers review of council in 2013, which was somewhat scathing of our financial situation, Fitch Ratings has provided us with an independent lens that says we are doing well and, most importantly, they have confidence in our financial position," she said.
"Having an external agency like Fitch Ratings assessing us on an ongoing basis should bring increased comfort to Rotorua ratepayers that the district's financial affairs are being well monitored."
The process to have a credit rating completed took several months of investigating and analysis by Fitch Ratings which included looking at the council's long-term plan, governance and management structures, socio-economic drivers in the district, current and forecast debt levels and certainty of council income.
Tauranga City Council was in the bottom quarter of the New Zealand councils that were assessed.
The council scored an A+ by Standard and Poor's, joining earthquake-hit Christchurch, Horowhenua, Kapiti Coast and South Taranaki at the bottom of a list of 22 councils ranked by the agencies.