Market Overview

Trouble Down Under? S&P Threatens To Cut Australia's AAA Rating

Trouble Down Under? S&P Threatens To Cut Australia's AAA Rating

Australia is now facing the risk of losing its prestigious AAA credit rating with the S&P. The S&P Global ratings lowered Australia's outlook to negative, with fears regarding the countries debt levels.

According to a report by CNBC, "S&P cited a combination of the government's budget deficits and the likelihood of a political stalemate as the country awaits the outcome of what is likely to be a very close election as the reasons behind its decision."

The global economic crisis of 2008-2009 and the end of the mining boom has seen Australia's finances weakened. The ongoing political stalemate in Australia, that has seen no major political party take control in either house, means that seeing a budget surplus in the near future is unlikely.

The S&P believes there is a 1 in 3 chance that Australia's credit rating is cut within the next two years, if the country cant get its finances in order.

"Ongoing budget deficits may become incompatible with Australia's high level of external indebtedness and therefore inconsistent with a 'AAA' rating," S&P said in a statement.

In what is set to be a very close election, the Liberal-National coalition is leading by a slim majority, although several constituencies are still too close to call.


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