Bangkok--13 Jul--Standard & Poor's Standard & Poor's Ratings Services today lowered its long-term rating on New Zealand's Tauranga City Council to 'A' from 'A+'. The short-term rating of 'A-1' remains unchanged. The outlook is stable. "An intensified revenue-raising effort by Tauranga means that operating cash flows are expected to remain strong," said Standard & Poor's credit analyst Anna Hughes of the International Public Finance Ratings group. "However, in response to its large capital-expenditure program, Tauranga is increasing its debt burden to levels that are no longer consistent with an 'A+' rating." The council's net debt is high (compared with rated New Zealand local government peers) at about 138% of revenue. The 2006-2016 Long-Term Council Community Plan (LTCCP) outlines significant capital-spending plans, which could see the council's net debt burden rise to close to 250% of revenue by fiscal 2009. "Standard & Poor's does not believe that Tauranga will reach this forecasted level," said Ms. Hughes. "Nevertheless, even after factoring in capital under spending of around 10%-20%, the council's debt burden is still likely to reach about 190% of revenue while their interest burden is expected to reach around 17% of operating revenue--a level inconsistent with an 'A+' rating." "Tauranga's capital expenditure has been growing consistently in recent years and any under spending is generally carried forward and spent in the following years. Consequently, the rise in debt levels is a matter of timing rather than possibility." Ratings are statements of opinion, not statements of fact or recommendations to buy, hold, or sell any securities. Standard & Poor's (Australia) Pty. Ltd. does not hold an Australian financial services license under the Corporations Act 2001. Any rating and the information contained in any research report published by Standard & Poor's is of a general nature. It has been prepared without taking into account any recipient's particular financial needs, circumstances, and objectives. Therefore, a recipient should assess the appropriateness of such information to it before making an investment decision based on this information. Complete ratings information is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. Media Contact: David Wargin, New York (1) 212-438-1579 [email protected] Analyst Contacts: Anna Hughes, Melbourne (61) 3- 9631-2010 Brendan Flynn, Melbourne (61) 3-9631-2042