Australia’s largest bond investors are piling into high-yielding state debt as budget blowouts induced by overly ambitious election promises and the threat of rating downgrades push up their borrowing costs.
Rating agency S&P warned last week that state governments faced lower credit ratings for failing to rein in pandemic-era spending to instead buy votes, rather than save money. That means that if the rating firms deem that state debt is now more risky, investors can charge more to lend money.
Source: https://www.afr.com/markets/debt-markets/there-s-a-reason-why-investors-are-flocking-to-fund-australian-states-20250207-p5labr