Nordic Credit Rating (NCR) has assigned a 'AA+' long-term issuer rating to Norway's Ringerike municipality. The outlook is stable. An 'N1' short-term rating was also assigned. In addition, NCR has assigned 'AA+' issue ratings to Ringerike's senior unsecured bonds.
Rating rationale
The long-term issuer rating reflects the municipality's average budget performance and demographic profile within the domestic local government sector. Ringerike has prudent financial reserves that have supported slim operating margins in recent years. We foresee a positive margin trend for Ringerike from 2025 and believe that the municipality will prioritize adding back to its financial reserves. The municipality benefits from its commuting distance to Oslo, Norway's capital, and its population has been steady historically.
The rating is constrained by Ringerike's high debt and interest burden compared with levels for other domestic local governments due to high investment requirements to serve its citizens and meet policy objectives. We expect the municipality's debt will remain elevated during our forecast period. Ringerike continually monitors liquidity, but we note that its liquidity has weakened gradually over the past three years. However, we view Ringerike's debt with average time to maturity of 10 years as positive and consider its refinancing risk to be low due to readily available funding sources.
Ringerike benefits from Norway's exceptional creditworthiness, given the country's institutional stability, strong governance, and conservative fiscal performance. Local and regional government institutions are strong thanks to a predictable revenue distribution system and a robust framework that supports solid governance and transparency.
Stable outlook
The stable outlook reflects our view that Ringerike will continue to have an average budget performance within the sector. We expect the municipality will improve margins slightly while carefully managing its debt and interest expense. We also believe Ringerike will take necessary measures to ensure a balanced budget and strengthen financial reserves. We expect Norway's creditworthiness will remain stable, with no material changes to the institutional framework.
We could raise the rating on Ringerike to reflect a significant reduction in gross debt and interest payments, materially improved operating margins and financial reserves, or stronger demographics than we currently expect.
We could lower the rating to reflect a deteriorating operating margin or high capital spending resulting in a drain on Ringerike's financial reserves, a significant rise in gross debt or interest payments, or weaker demographics than we currently expect.
| Rating list | Rating |
|---|---|
| Long-term issuer credit rating: | AA+ |
| Outlook: | Stable |
| Short-term issuer credit rating: | N1 |
| Senior unsecured issue rating: | AA+ |
Contacts:
Anine Gulbrandsen, analyst, +4797501657,
anine.gulbrandsen@nordiccreditrating.com
Elisabeth Adebäck, analyst, +46700442775,
elisabeth.adeback@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337,
sean.cotten@nordiccreditrating.com
The methodology documents used for this rating are NCR's Rating Principles published on 14 Feb. 2024, NCR's Local & Regional Government Rating Methodology published on 14 Feb. 2024 and NCR's Sovereign Credit Assessment Methodology published on 26 Mar. 2024. For the full
regulatory disclaimer please see the rating report.