New York, December 21, 2011 -- Moody's maintains the following ratings on Australia, Government
of:
Long Term Issuer (domestic and foreign currency) ratings of Aaa
Senior Unsecured (domestic and foreign currency) ratings of Aaa
Senior Unsecured Shelf (foreign currency) rating of (P)Aaa
RATINGS RATIONALE
Australia's Aaa ratings are based on the country's very high economic
resiliency, very high government financial strength, and very
low susceptibility to event risk. Economic resiliency is demonstrated
by the country's very high per capita income, large size,
and economic diversity. As one of the world's most advanced economies,
the country has not only a significant natural resource sector--including
minerals, hydrocarbons, and agriculture--but
also well developed manufacturing and service sectors. It also
demonstrates strong governance indicators. In particular,
the framework for fiscal policy is transparent and has, until now,
consistently kept government debt at low levels.
The government's debt rating of Aaa takes into account the aim of maintaining
a balanced budget, on average, over the business cycle.
It is supported by the very low level of public debt and the country's
strong financial system. In comparison to most other Aaa-rated
countries, Australia's government financial strength is very high,
with very low gross debt that is easily affordable and provides a high
degree of fiscal flexibility.
Although Australia's demographics and policy framework leave it well positioned
to deal with population aging relative to other industrial countries,
the government's own analysis indicates that health and aged care spending
will lead to the emergence of a funding gap over the next 40 years.
While the fiscal burden is well into the future, policy measures
to address it will have to be initiated in the near term.
The diversity of the economy and the strength of the financial system
lead to a very low level of event risk. However, the banks
are more dependent on foreign funding than in some other advanced economies.
The large size of the negative net international investment position is
a vulnerability in times of global financial market stress.
Rating Outlook
The stable ratings outlook is premised on the expectations that the government
will maintain its low debt levels and macroeconomic conditions will continue
to support fiscal consolidation. The Commonwealth government was
a net creditor prior to the global crisis, but will show small net
debt for the coming few years.
What Could Change the Rating - Down
Any trend or event that caused a long-term shift in budget balances
to significant deficits and an increasing public debt burden might put
downward pressure on the rating. Such trends could include,
for example, fiscal costs associated with an aging population.
However, since the government has been proactive in addressing this
issue through its superannuation policies and proposed reforms to healthcare
schemes, Moody's does not anticipate sustained fiscal deterioration
over the rating horizon.
The principal methodology used in this rating was Sovereign Bond Ratings
published in September 2008. Please see the Credit Policy page
on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
Although this credit rating has been issued in a non-EU country
which has not been recognized as endorsable at this date, this credit
rating is deemed "EU qualified by extension" and may still
be used by financial institutions for regulatory purposes until 31 January
2012. ESMA may extend the use of credit ratings for regulatory
purposes in the European Community for three additional months,
until 30 April 2012, if ESMA decides that exceptional circumstances
arise that may imply potential market disruption or financial instability.
Further information on the EU endorsement status and on the Moody's
office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Information sources used to prepare the rating are the following:
parties involved in the ratings, parties not involved in the ratings,
and public information.
Moody's considers the quality of information available on the rated
entity, obligation or credit satisfactory for the purposes of issuing
a rating.
Moody's adopts all necessary measures so that the information it
uses in assigning a rating is of sufficient quality and from sources Moody's
considers to be reliable including, when appropriate, independent
third-party sources. However, Moody's is not
an auditor and cannot in every instance independently verify or validate
information received in the rating process.
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%)
and for (B) further information regarding certain affiliations that may
exist between directors of MCO and rated entities as well as (C) the names
of entities that hold ratings from MIS that have also publicly reported
to the SEC an ownership interest in MCO of more than 5%.
A member of the board of directors of this rated entity may also be a
member of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating
Process page on www.moodys.com for further information on
the meaning of each rating category and the definition of default and
recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history. The date on
which some ratings were first released goes back to a time before Moody's
ratings were fully digitized and accurate data may not be available.
Consequently, Moody's provides a date that it believes is
the most reliable and accurate based on the information that is available
to it. Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has
issued the rating.
Steven A. Hess
VP - Senior Credit Officer
Sovereign Risk Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Bart Oosterveld
MD - Sovereign Risk
Sovereign Risk Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Disclosures on Credit Ratings of Australia, Government of