EXHIBIT (c)(x)
Announcement Entitled
“Moody’s places Queensland’s Aaa rating under review for possible downgrade.”
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 | | Global Credit Research Rating Action 26 FEB 2009 |
Rating Action: Queensland Treasury Corporation
Moody’s places Queensland’s Aaa rating under review for possible downgrade
New York, February 26, 2009 — Moody’s has placed the State of Queensland’s Aaa rating under review for possible downgrade to reflect the state’s deteriorating financial and debt performance and uncertainties regarding government policy response.
“The review will focus on the state’s medium-term strategy to manage these budgetary pressures and the resulting deterioration in debt metrics, while pursuing efforts to stimulate economic activity,” said Moody’s Vice President Debra Roane. A rating review is typically concluded within a three month time frame.
On February 20, 2009 the state published an interim budget update, “Economic and Fiscal Update” showing significant deterioration in financial and debt ratios compared to an earlier budget update report released just two months ago in December 2008.
The state had been forecasting a deficit position (on a cash basis) before the current economic downturn, largely due to elevated current spending and an ambitious $54 billion four-year capital expenditure program. Since then, the revised projections indicate that declining revenues, in particular conveyancing duties, coal royalties and GST-backed commonwealth grants, will result in much larger deficits than anticipated. The widening budget gaps and the resulting additional borrowing that is being projected place the state on a debt trajectory that may no longer be consistent with Aaa debt metrics.
“While the state’s economy is rapidly slowing from the robust trends of recent years, Queensland has ample budgetary flexibility to manage the projected decline in revenues,” said Roane. “However, the government policy response to these budgetary pressures has yet to be articulated.” Moody’s review therefore will in part focus on assessing the state’s medium-term financial strategy and its ability to avoid a structural weakening in debt servicing capacity.
Despite these uncertainties, Moody’s notes that Queensland retains important credit strengths including a robust institutional framework that allows for secure and predictable government transfers, a high level of internal liquidity and ample budget flexibility.
Moody’s assigns long-term debt and issuer ratings to the Queensland Treasury Corporation (QTC), the entity which issues debt on behalf of the state of Queensland and its government owned corporations. QTC’s debt is guaranteed by the State of Queensland and the rating reflects the credit quality of the state. Moody’s also assigns a short term rating of Prime-1 to Queensland’s commercial paper program.
The principal methodologies used in rating QTC was “Regional and Local Governments Outside the US” and “The Application of Joint Default Analysis to Regional and Local Governments”, which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating QTC can also be found in the Credit Policy & Methodologies directory.
Moody’s raised QTC’s foreign currency rating to Aaa from Aa2 in October 20, 2002 to reflect the revision in the sovereign ceiling to Aaa from Aa2. QTC’s Aaa domestic currency rating was assigned in June 1, 1989.
London
Yves Lemay
Managing Director
International Public Finance
Moody’s Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
New York
Debra Roane
VP - Senior Credit Officer
International Public Finance
Moody’s Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
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