6 April 2018

Council retains its Fitch credit rating despite challenges

Rotorua Lakes Council has retained its AA- credit rating from international agency Fitch for the third year running.

In rating the council Fitch International took into account previous financial performance and the draft 2018-28 Long-term Plan which is currently out for public consultation. Council’s finances were first tested by Fitch in 2016 when Council received a AA- rating.

Chief Financial Officer Thomas Collé says given the past year has been a difficult one for the organisation financially, it is very pleasing Council has retained its AA- rating with a stable outlook.

Fitch has noted a high level of debt relative to peers but notes Council is looking to address a backlog of infrastructure work and– and that the debt level is supported by predictable rates revenue and access to funding from the New Zealand Local Government Funding Agency Limited which has an AA rating and provides a generally cheaper source of funding for councils.

Rotorua Mayor Steve Chadwick says the rating should give the community confidence in the financial stability of the Council and the sustainability of the proposed long-term plan.

“This adds to our confidence in continuing to invest in our growing district. It also aids our ability to attract investment into Rotorua because it provides assurance for potential investors and central government that we will prudently manage their investment.”

“We have committed to ensuring we have a prudent and sustainable financial framework that provides longer term assurance for the organisation and for our community, a turn-around from what was a pretty bleak picture a few years ago.

“Council has worked very hard to rectify that as part of ensuring we have an efficient and effective organisation that is adaptable, resilient and able to deliver.

“Fitch is a totally independent agency which provides an additional lens on our finances to ensure we remain on track. They cast a very critical eye on all aspects of Council so it’s very pleasing to have retained such a good rating given the challenges we’ve faced with building closures affecting revenue and adverse weather inflicting additional costs on the council.

“This also affirms the financial prudence of our draft Long-term plan which Fitch scrutinised as part of their assessment,” the mayor says.

Fitch considers Rotorua Lakes Council to have a strong institutional framework, resilient financial performance with achievable financial forecasts and a commitment to sound capital expenditure management with clear policy guidelines and rigorous planning and consultation. The firm said the rating reflected the council’s strong management.

In announcing the rating Fitch says the council has addressed previously weak performance and the agency believes financial forecasts, as outlined in council's annual and long-term plans, are achievable.

Council’s finances were first tested by Fitch International in 2016 as another check to ensure effective financial management.

Mr Collé announced the Fitch rating during yesterday’s Operations and Monitoring Committee meeting.

Councillor Tania Tapsell, who chaired the meeting, was pleased to hear the news. “It is amazing we have been able to hold our AA- rating and that they do believe we have a stable outlook.

“It reaffirms the financial prudence we have as an organisation despite the challenges we’ve had,” she said.

[ENDS]

© Scoop Media