Council rating may attract investment

Wanganui District Council PHOTO/FILE

The Wanganui District Council has been given a credit rating in line with the country's three major banks and on the strength of that expects to find it easier attracting investors.

The international financial rating agency Standard & Poors has given the council an AA- credit rating.

Julian Harkness, council's finance and corporate manager, told councillors this week that the rating was part of council's 10-year plan.

The first part was to issue short-term bonds, then join the New Zealand Local Government Funding Agency (LGFA), with achieving a credit rating the final step.

Mr Harkness said the council carried $84 million in external debt which, according to the 10-year plan, would increase in coming years.

"A significant portion of this new debt would be sourced from the LGFA which offers interest savings for those councils with favourable credit ratings," he said.

"And given we'll need funding for the $24 million wastewater treatment plant upgrade, this rating will be helpful."

It is the first time the Wanganui council has had a credit rating. "At a time when it's hard to get some investors to invest, a credit rating does make a difference."

But Mr Harkness warned that a downward trend in the rate "would not be good".

Getting access to a bigger pool of lenders is the prime reason behind the decision to secure an internationally-recognised credit rating.

It is a move that will cost about $50,000, with ongoing annual costs of a similar amount, but council officers say that will be more than compensated through interest savings that would follow from achieving a credit rating.

At the moment about 60 per cent of the country's councils have credit ratings, ranging from AA to A+.

Mayor Annette Main called the credit rating was a vote of confidence in council's "prudent financial management, budget flexibility and transparency".

Ms Main said it would also give added confidence to the council's bond holders.