Moodys: Climb in Australian government debt would be credit negative
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