Wellington: New Zealand's credit rating has been downgraded by two of the three major ratings agencies amid increased global concern over high debt burdens in developed nations.
Fitch and Standard & Poor's yesterday downgraded New Zealand from an AA" rating to AA.
In the past, New Zealand has enjoyed strong sovereign credit ratings due to relatively low levels of government borrowing that offset worries about the country's high private debt. But the ratings agencies have become less sanguine after an earthquake and weak economic growth strained the government's finances.
The agencies are taking a harder line on any form of debt in the wake of the global financial crisis. Countries such as Ireland, which was forced to bail out banks after the global recession, have demonstrated how private debt can easily become a problem for the government.
