29 May 2009

Standard and Poor's gives tick to Budget

5:34 am on 29 May 2009

Credit rating agency Standard & Poor's has revised its outlook on New Zealand from negative to stable, and affirmed its AA+ rating, after what it calls a sound Budget.

On Monday Standard & Poor's reiterated its warning to the New Zealand Government to come up with a plan to lower debt levels, or risk a downgrade in the rating.

S & P says it believes the measures announced in Thursday's Budget will help to stabilise the Government's fiscal position over the medium term.

S & P credit analyst Kyran Curry says the main risk to the rating would be a significant weakening in the credit quality of New Zealand's banks, which are largely Australian-owned.

However, he expects the banks will continue to be able to absorb the likely increase in credit losses during the downturn.