The November 14 earthquake has not impacted Wellington City Council’s Standard and Poor’s (S&P) AA long-term credit rating, as well as its A-1+ short-term issuer credit rating, thanks to its comprehensive insurance policies.
The ratings agency explained: “We consider that any significant damage resulting from a natural disaster, such as an earthquake, has a small likelihood of affecting the council’s debt levels, given that the council has comprehensive insurance policies.”
S&P said Wellington has a higher stand-alone credit profile than the New Zealand sovereign, but clarified that no city in the country, Wellington included, can maintain stronger credit characteristics than the sovereign in a stress scenario.
“Wellington’s key credit strength is anchored on its very strong financial management. The highly qualified and experienced management team manages internal and external risks through an extensive and credible framework,” S&P said.
“The council has progressed its capital expenditure program, focusing on various projects including transportation initiatives, upgrading the civic campus and town hall, and finalizing plans for the development of a film museum and associated convention centre.
“Our expectation is that, over the next two years, the stand-alone credit quality of Wellington City will remain very strong, and the council will continue to manage its financial position prudently.”
Justin Lester, Wellington’s mayor, said the S&P rating shows that the city is well positioned to respond to and prepare for earthquakes and other disasters.
“Wellington has one of the strongest balance sheets of any city in the country, and it’s good to see that reflected in such a strong credit rating. While the earthquake presents real challenges for the city, this gives us the ability to respond well,” Lester said.
“Our strong financial position also means we will be able afford to invest in projects to make our city more resilient. In response to the earthquakes, I have asked council officials to pull together a list of investments in disaster preparedness that we can fast-track. This will mean we can do more to make sure our city is safe for the future.”
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