S&p Tips Local Ratings Pick-up
The Age
Wednesday January 11, 1995
Australian companies are in their best position in years and some could be in line for higher credit ratings, the international ratings agency Standard & Poor's Corp said yesterday.
``In Australia and New Zealand ratings will continue to consolidate upwards, albeit slowly, as the two economies strengthen at a sustainable pace," the managing director of S&P's Melbourne office, Mr Graeme Lee, said in a statement after the release of S&P's Global Credit Perspectives report in the United States.
``Corporates and banks are in a far better position than they were three years ago due to restructurings and cost-saving measures, high consumer demand and lower unemployment," he said.
However, the global report warned that a risk worldwide in 1995 was that ``leaner corporates and banks will be tempted to leverage off the restructuring gains of the previous years".
This could lead to excessive use of debt issues to fund acquisitions and investments, it said.
On Australia, it said some scope existed for rating improvements given further domestic and world economic growth, and provided ``financial conservatism remains a virtue".
However, it said the rising Australian dollar could offset the benefits of higher commodity prices and low inflation for the export- oriented natural resource and agricultural sectors. --AAP.
© 1995 The Age
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