Guess which state or territory has the worst credit rating? Before answering, let me explain what a credit rating is.
An S&P Global Ratings issue credit rating is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs).
Basically, it is an assessment of the risk of repaying borrowings. This is important for Government borrowings which are “unsecured”; in the event of default, the lender does not get the title to parliament house or the opera house or sadly, the entirety of the ACT.
Notwithstanding, and asking again, guess which State/Territory has the WORST credit rating?
Drum roll, please …
Victoria. Worse than Queensland. Worse than Tasmania. Worse than South Australia.
Basically, S&P think it is riskier to lend to the Victorian government than the Queensland government.
And – according to S&P — a factor in the hacking of the Victorian credit rating has been the significant increase in public sector salaries over the past several years making it harder to return to operating surplus.
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