Last week we had Commonwealth Bank of Australia analysts warn that Australia is most likely to lose its AAA rating
Post is here if you missed it
Westpac have provided their analysis, in brief saying that they are of the opinion that the next S&P sovereign rating review for Oz should maintain the Negative Outlook but not undertake a full downgrade. WPAC do concede though that “ratings decision will be “line ball” and dependent on a subjective view around the government’s approach to fiscal repair.”
- In the end, we think that the biggest influence on whether or not S&P choose to shift their rating will come down to whether they are confident that the current political considerations around fiscal repair are appropriate. If they were to take a similar stance to previous years, then a downgrade would be almost certain. However the postpandemic world is a different place. And focusing on achieving budget surpluses on too tight a time frame would, in our view, be counter-productive to the ultimate creditworthiness of the sovereign and the aim of the debt rating.