Australia: S&P downgrades the outlook from stable to negative - TDS

Research Team at TDS, notes that S&P finally confirmed what many analysts including TD said Monday: Australia’s AAA/stable rating was at risk with a hung parliament give history suggests a policy-and-reform-free zone for the next three years.

Key Quotes

“SnP officially downgraded the outlook from stable to negative, however, after AAA rating loss for the US and UK (and others) in recent years, this isn’t quite the sticker shock to investors that it used to be. 

We don't expect an actual downgrade to AA+, but co-operation from the Senate crossbenchers and more sabre-rattling from the credit ratings agencies on pushing ahead with fiscal reform will be essential.  A shift to a "negative outlook" implies a one-in-three chance of an actual downgrade “within two years”, so 67% chance of no downgrade.”