Moody's sees no immediate threat to Australia's triple A rating
SYDNEY, Sept 12 |
SYDNEY, Sept 12 (Reuters) - Rating agency Moody's said it sees no immediate threat to Australia's triple A rating from tumbling commodity prices that have prompted some miners to scrap planned investments and cut output.
Prices for iron ore and coal, Australia's two largest exports, have fallen sharply in recent weeks, raising concerns about the impact on Australia's terms of trade and tax revenues if the slump is prolonged.
"We are very comfortable with Australia's triple A ratings because of the government's very low debt levels compared with other sovereigns in the triple A category," Steven Hess, a senior vice president at Moody's in New York, told Reuters in a telephone interview on Wednesday.
The resource-rich country is one of just 10 nations with a top-notch rating and stable outlook from Moody's.
To the envy of many Western nations, Australia's net debt is expected to be 9.2 percent of gross domestic product in 2012/13, a fraction of that of Japan or Europe.
Hess said risks stemming from a slowdown in China, falling commodity prices and uncertainty in Europe and the United States were manageable in the context of low government debt.
Recent falls in commodity prices will affect national income, terms of trade and potentially government finances, but will not lead to any real crisis.
"We don't see any immediate threat to the ratings," he said, adding he expected an improvement in federal finances.
Miners including BHP Billiton, Fortescue Metals Group and Xstrata Plc have announced Australia investment cuts and job losses in recent weeks, citing weak prices.
In May, the Labor government pledged to return to budget surplus by 2013. Treasurer Wayne Swan last week said the fall in prices had been steeper and faster than expected and would make that more difficult to achieve if the slide continued, but reiterated the government's commitment to a surplus.
On the state level, however, Moody's is not as bullish, having cut on Tuesday, the state of South Australia's rating to A1, blaming persistent deficits and mounting debt.
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