Moody's says Australia's triple-A rating safe for now

Campaign posters of various candidates stand as voters enter a polling station in Sydney, Australia, on July 2.
Campaign posters of various candidates stand as voters enter a polling station in Sydney, Australia, on July 2. PHOTO: BLOOMBERG

SYDNEY (REUTERS, BLOOMBERG) - Moody's Investors Service on Monday (July 4) said short-lived political uncertainty in Australia would have limited implications for the country's coveted triple-A credit rating.

The ratings agency issued the statement after a general election on Saturday produced no clear winner even after more than half the votes had been counted.

An outcome is not expected for several days, raising the prospect of prolonged political and economic instability.

The Aussie dollar had earlier fallen 0.4 per cent to 74.66 US cents as of 10:10 am in Sydney as economists said the risk of a cut to the country's AAA sovereign rating had increased following the election outcome.

A mounting budget deficit has also put the AAA credit rating under pressure. Moody's, S&P Global Ratings and Fitch Ratings all currently have Australia at the top grade with a stable outlook.

Moody's on Monday said it expected fiscal consolidation to remain a key policy objective of the new government, when it is formed.

"Looking ahead, trends in Australia's credit profile will be determined by whether fiscal objectives are effectively implemented, whether external financing conditions remain favourable and how housing market developments affect domestic growth and financial conditions," said Marie Diron, senior vice president at Moody's.