Singapore, June 23, 2020 — Moody’s Investors Service (“Moody’s”) has today affirmed the Government of Australia’s long-term issuer and senior unsecured ratings at Aaa and maintained the stable outlook.
The rating affirmation and stable outlook reflect Moody’s expectation that Australia’s economic and institutions and governance strengths will continue to support the sovereign’s resilience in the face of shocks including the current coronavirus pandemic. The economy’s wealth, diversification and effective labour market, and sound monetary, financial and fiscal institutions, with track records of proactive and effective policymaking, reduce the credit impact of shocks.
The depredations of the coronavirus outbreak on domestic economic activity and employment combined with a sharply worsening global economy are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. For Australia, the shock manifests in reduced Chinese demand for its exports, exacerbating the effects of the US-China trade dispute; and in a significant widening in the fiscal deficits and increase in the government’s debt burden. However, Moody’s expects that a long-standing consensus on prudent management of public finances will continue to prevail, and as the economy recovers, the sovereign’s fiscal strength will remain broadly resilient.
The long-term local- and foreign-currency bond and deposit ceilings are all unchanged at Aaa. The short-term foreign-currency bond and deposit ceilings remain at Prime-1 (P-1).