Kāpiti credit outlook revised from negative to stable
19 Mar 2025, 3:30 PM
Kāpiti Coast District Council is one of many New Zealand councils have had a credit rating change as part of an assessment by credit rating agency S&P Global.
Council chief executive Darren Edwards says this is not surprising given the increased demands on local government.
Mr Edwards says S&P Global Council’s credit rating has moved Kāpiti from AA to AA-. However, at the same time its outlook for Kāpiti has been revised from negative to stable.
The agency said councils have increased their capital budgets to deliver infrastructure for growth, improve quality, and cover rising costs and that the local government sector’s revenue is not enough to fund its growing responsibilities.
It also cited a more volatile policy environment than in the past as contributing to the shift.
Mr Edwards says the rating change will have a minor impact on borrowing costs.
“As S&P has said councils are having to respond to a range of factors like rapidly changing laws, the cancellation of Crown grant programs, and an increase in unfunded mandates.
“Basically, the amount of money we can raise is not enough to do all the things required of us, which has pushed up council debt across the country.
“It’s also important to note having an AA- credit rating is a good position to be in.”
Mr Edwards says Kāpiti Coast District Council has a financial strategy to reduce its debt over the coming years.
“Council needs to manage its debt levels, and our current debt reflects the sound investment we’ve made particularly in our water services, making us one of the best in the country.
“We’ve got a great plan to bring our debt down over the coming years. We’ve committed to a long-term strategy that will set us up well for the future and improve our credit rating.”
Kāpiti District Mayor Janet Holborow says the financial strategy aims to build a resilient future for the district.
“By actively reducing our debt over the next 10 years our borrowing costs will come down, which means we’ll have more capacity to affordably respond to growth and unplanned natural disasters.
“It will take time to get to where we want to be, so we need to stick to the plan.”
Mayor Holborow says the rating assessment again highlights the need for a meaningful conversation about how local government is funded and financed.
“S&P have made it clear that councils are not properly resourced to do all the things central government asks of it,” Mayor Holborow says.
“It’s all very well for the government of the day to heap new responsibilities onto councils or make sudden and costly policy U-turns, but these things have very real consequences for councils and their communities.
“Put simply, volatility costs money.”