S&P revises Australian sovereign credit outlook to negative, from stable
Current rating AAA, affrimed
S&P watching 'gridlock' in politics, likely impact on the budget
- "Believe that without remedial action fiscal stance may no longer be compatible with country's high level of external indebtedness"
More:
- Negative outlook reflects that without implementation of fiscal policy decisions, deficits may persist for several years
- Expect that fiscal deficits will improve over medium term, are more pessimistic about government's revenue outlook
- Expect Australia's external borrowers to maintain easy access to foreign funding
- Consider Australia's banking system to be one of the strongest globally
- Estimate headline GDP growth to be around 3% in fiscal year 2016, and unemployment rate has fallen from last year's cyclical high
Headlines via Reuters
AUD dropping away on the news
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More (this via twitter, not the wires and I haven't seen it elsewhere):
- S&P saying a 1 in 3 chance of a rating cut within 2 years
That 1 in 3 now in the Financial review too:
- There is now a "one in three" chance the rating will be cut within two years if S&P senses the next parliament fails to either hike taxes or cut spending enough to curb ballooning budget deficits and debt.
