AAA credit rating ‘encouraging’ amid recession

AAA credit rating 'encouraging' amid recession

Market Economics’ Stephen Koukoulas says Australia’s reaffirmed AAA credit rating is “encouraging” despite Australia entering a recession triggered by the coronavirus pandemic.

Ratings agency Moody’s pointed to a resilient economy and effective policy-making as reasons for its decision to reaffirm Australia’s AAA credit rating.

Treasurer Josh Frydenberg lauded it as “very good news for the Australian economy to receive a vote of confidence”.

“It’s better to have it than to have junk status on sovereign bonds,” Mr Koukoulas told Sky News.

“Because that means very high interest rates and difficulty raising debt.

“It matters because the credit rating from Moody’s are a benchmark for investors.

“They are an assessment of risk and if you’ve got a AAA rating it implies you’re a good credit.

“You’re very unlikely to default and you’ve got a sound economy.”

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