NT's credit rating downgraded

MOODY'S has downgraded the credit rating of the Northern Territory, citing the jurisdiction's rapidly rising debt.

The credit agency downgraded the NT's rating from Aa1 stable to Aa1 with a negative outlook.

"The change in the outlook reflects the deterioration in the territory's financial performance which emerged in recent years and is expected to persist over the medium term," Moody's said in a statement.

It said there was also expected to be a rapid rise in the NT's debt burden.

As well as widening deficits of the general government sector Moody's said there were deteriorating trends in the government-owned Power and Water Corporation (PWC).

It said there were insufficient rate adjustments at PWC in the context of a large capital program.

The agency said debt to revenues was projected to rise from a moderate 48 per cent of revenues in 2008/09 to 85 per cent in 2012/13 and further over the medium term.

Despite the problems Moody's said 70 per cent of the NT's income came from commonwealth grants.

It also said the credit rating was supported by large resource investments and the government's plan to achieve fiscal redress over the medium term.

Since taking office in August last year, the Country Liberal Party (CLP) has raised water and electricity prices in a bid to improve the financial situation of PWC.

Moody's said the NT's outlook could revert to stable if spending growth was constrained and the financial performance of PWC was improved.

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