Moodys: Climb in Australian government debt would be credit negative

Author: Eamonn Sheridan | Category: News

Moody's comments  crossing the wires

  • Australian federal spending cuts may be modest
  • Climb in Australian government debt would be credit negative
  • Moody's sees Australian government debt-to-GDP to rise to around 38% for the 2018 fiscal year (from 35.1% in F2015)
  • Without revenue steps Australian government debt likely to climb
  • Australia has favourable fiscal metrics relative to AAA-rated peers
Headlines via Bloomberg

Moody's pre-empting the Australian federal Budget due May 3.
If you are not a fan of credit ratings agencies (they do get a lot of stick) then now would be a good time to scoff. On the other hand, if you are a fan, a good time to pay out on the Australian government, economy etc. Everyone's a winner!

AUD a little lower on these crossing the wires

If Australia loses its AAA rating it will mean those bond holders with a mandate to hold AAAs will have to get out of Australia. I don't know the proportion of these such holders but it ain't huge.
More on the Moody's report:
  • Australia's focus on spending cuts vs raising revenues makes balancing federal budget difficult
  • Actual spending cuts may be modest and unlikely to meaningfully advance the government's aim of balanced finances by 2021
  • Fading prospects for tax reform present challenges to boosting government revenues
  • Lower commodity prices are weighing on receipts from corporate profits and income taxes
  • Changes to superannuation tax concessions are still on the agenda and will raise government revenues, but will be insufficient in achieving a balanced budget within five years

And, don't forget ... Australian employment data due at 0030GMT
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