Research Update: Tasman District Council 'AA/A-1+' Ratings Affirmed; Outlook Negative

Tasman District Council's deficits are wider than our previous expectations, amid rising costs of delivering council services and improved capital delivery. We expect after capital account deficits to average about 13.7% of total revenue over fiscal 2023-2027 (year-end June 30). Cost overruns for the Waimea Community Dam contributed to weaker budgetary outcomes and a steady rise in debt. Total tax-supported debt rose to 221% of operating revenues in fiscal 2024, from 117% in fiscal 2021. Moderating capital expenditure (capex) and increases in general rates should reduce after capital account deficits and stabilize the debt burden from fiscal 2025. We affirmed our 'AA' long-term and 'A-1+' short-term issuer credit ratings on Tasman. The negative outlook on the long-term rating reflects our

...- Tasman District Council's deficits are wider than our previous expectations, amid rising costs of delivering council services and improved capital delivery. We expect after capital account deficits to average about 13.7% of total revenue over fiscal 2023-2027 (year-end June 30). - Cost overruns for the Waimea Community Dam contributed to weaker budgetary outcomes and a steady rise in debt. Total tax-supported debt rose to 221% of operating revenues in fiscal 2024, from 117% in fiscal 2021. Moderating capital expenditure (capex) and increases in general rates should reduce after capital account deficits and stabilize the debt burden from fiscal 2025. - We affirmed our '##' long-term and 'A-1+' short-term issuer credit ratings on Tasman. - The negative outlook on the long-term rating reflects our view that liquidity coverage could weaken and debt could rise beyond our forecasts. It also reflects downward pressure on the institutional settings of New Zealand's local government sector....

Research Update