In its latest review report on New Zealand’s (NZ) sovereign credit ratings, Moody’s Investors Service affirmed the NZ long-term issuer and senior unsecured ratings at Aaa and maintained the stable outlook.
“The drivers behind the rating affirmation include Moody’s assessment of New Zealand’s strong governance, including sound monetary and fiscal institutions with track records of proactive and effective policymaking.
The Aaa rating also considers the government’s very strong fiscal position, which further supports shock absorption capacity, and New Zealand’s relatively wealthy and flexible economy.
The stable outlook reflects Moody’s view that the credit impact of potential downside risks, including risks related to the economy’s commodity dependence, reliance on external financing and elevated household debt, will be mitigated by highly effective institutions and governance.
The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets.
The combined credit effects of these developments are unprecedented.
Moody’s expects the New Zealand economy to remain resilient in the face of shocks, given its trade openness, diverse and competitive agricultural export base, flexible labor and product markets, high wealth levels, and favorable demographics, driven by robust migration trends.”
Despite the coronavirus crisis, Moody’s sounded optimistic on the NZ economic situation, which revived the buying interested around the Kiwi dollar, driving NZD/USD back to the daily highs of 0.5974.
At the time of writing, the spot trades nearly 1% higher at 0.5960.