OREANDA-NEWS. November 10, 2015. Fitch Ratings has assigned Invercargill City Council's (Invercargill) NZD20m medium-term notes (MTNs) a 'AA' rating.

The MTNs, which mature on 29 October 2022, are senior secured obligations that rank equally with other senior secured obligations of Invercargill. The security is a charge over the rates and rates revenue of Invercargill, which accounted for 57% of cash-flow operating revenues in the financial year to end-June 2014.

The debt will be used for general corporate purposes and instead of bank funding. The MTN's seven-year maturity extends the maturity profile of council's borrowings, which was around 3.5 years at end-June 2014.

KEY RATING DRIVERS
The rating on the MTNs is equalised with Invercargill's Long-Term Local-Currency Issuer Default Rating (IDR) in accordance with Fitch's rating criteria, and reflects the general credit quality of Invercargill. Under Fitch's Tax-Supported Rating Criteria, the agency does not incorporate any measure of recovery (or loss) given default. The MTNs have been assessed solely on their relative vulnerability (probability) of default, which is considered by the agency to be the same as Invercargill.

RATING SENSITIVITIES
The rating on the MTNs is sensitive to any change in the IDR of Invercargill.

For details on the Key Rating Drivers and Rating Sensitivities for the rating on Invercargill, see the rating action commentary titled, "Fitch Assigns Invercargill City Council 'AA' Rating: Outlook Stable), dated 5 December 2014 and available on www.fitchratings.com.