Victoria’s credit rating has been downgraded again, but the agencies have said the outlook appears stable.
Moody’s downgraded Victoria from AA1 to AA2 on Friday after stripping her of her AAA status in February last year.
But in good news for the state, the rating agency upgraded Victoria’s outlook to “stable” after downgrading it to “negative” in 2021.
At the time, the ratings agency noted that state coffers were struggling under the weight of pandemic-induced economic disruptions.
But the recent sharp rebound in economic activity as lockdowns eased across the state made the outlook brighter.
Moody’s said the state’s debt management policies and other general policy priorities would lead to a “significant increase” in Victoria’s debt burden.
“As a result, (Victoria Treasury Corporation’s) intrinsic financial strength will continue to weaken from solid levels for the foreseeable future,” the ratings agency said.
He also warned that the state’s debt position may not stabilize until the end of 2026-27.
Victoria has faced a series of downgrades since the pandemic began, including Standard & Poors’ credit rating being downgraded from AAA to AA at the end of 2020.
Victoria treasurer Tim Pallas downplayed Moody’s initial downgrade in February last year.
“No one is immune to the impacts of the pandemic, but Victoria is better positioned than most jurisdictions around the world to recover,” he said at the time.
Moody’s said on Friday that sustained increases in revenue growth and spending cuts could improve Victoria’s credit rating.