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Christchurch council's rating downgraded

08:30 AEST Thu Dec 20 2012
Christchurch City Council

Christchurch City Council and its infrastructure arm have had their credit ratings downgraded by agency Standard & Poor's.

The ratings agency reduced its AA rating to AA- for both the council and Christchurch City Holdings Limited (CCHL) and says the outlook for both remains negative.

"The downgrades reflect our view that the council's financial management - while still positive - is increasingly being affected by a difficult environment stemming from a prolonged recovery period following the earthquakes," the agency said in a statement.

It says the degree of government control over the reconstruction, rather than the council, reduces its political and managerial strength.

Credit analyst Claire Curtin says the negative outlook is in place because there's "at least a one-in-three chance of a further downgrade" for the council in the next two years.

CCHL, a wholly owned subsidiary of the council and majority shareholder of companies including Orion Energy, Christchurch International Airport and Lyttelton Port, says the downgrade will have little impact on it.

"To a large degree the market has already factored in the downgrade because the credit rating has been on `watch' for the last year," chief executive Bob Lineham said.

He said rating the rating definition meant it has a very strong capacity to meet its financial commitments and the country's major banks had the same AA- rating.