Tasmania hit by second credit rating downgrade in a single week
S&P has delivered a devastating blow to Tasmania by downgrading its credit rating for the first time in three decades, following Moody’s similar action days earlier.
Tasmania has suffered another credit rating downgrade, the second in a week.
Global ratings agency S&P announced the state’s rating was to be dropped from AA+ to AA.
It is the first downgrade for the state by the agency in more than three decades.
“On Nov. 27, 2025, S&P Global Ratings lowered its foreign- and local-currency long-term
issuer credit ratings on Tasmania, an Australian state government, to ‘AA’ from ‘AA+’,” it said.
“At the same time, we affirmed our ‘A-1+’ short-term rating on Tasmania. The outlook on the long-term rating is stable.”
Earlier this week, ratings agency Moody’s downgraded Tasmania’s credit rating from A2 to Aa3 (outlook Stable), citing rising debt and interest costs.
The downgrades will make it more expensive for Tasmania to borrow money to service its debt.
The Tasmanian Chamber of Commerce and Industry called for urgent, credible budget reform centred on expense control and public service reform – not new taxes in the wake of the Moody’s downgrade.
“Government must lead by example: rein in expenditure growth, deliver promised public service reform, and honour the commitment of no new taxes,” CEO Michael Bailey said. “Tasmania cannot tax its way to confidence and growth. We need disciplined spending, transparent delivery, and accountability at the top.”
Treasurer Eric Abetz put a positive spin on the news.
“The decision by Standard & Poor’s is not unexpected and in line with Moody’s earlier decision, which has seen Tasmania’s outlook revised to stable,” he said.
“Tasmania’s economy remains strong, and the government has a clear plan to provide fiscal responsibility while maintaining the services Tasmanians deserve.”
Economist Saul Estlake from Corinna Economic Advisory said the downgrade reflected the state’s weak budget position.
“No one should be surprised that Standard & Poor’s has today downgraded Tasmania’s credit rating to AA, the equal lowest (along with Victoria and the ACT) of any of the Australian states and territories, following a similar move by Moody’s earlier this week,” he wrote in an analysis of the change.
“This is the first time that S&P has downgraded Tasmania since it was rated for the first time (as AA-) in 1993: it was upgraded to AA in 2001, and again to AA+ (where it had been until today) in 2004.
“S&P specifically cited the proposed stadium at Macquarie Point as a consideration, noting that in addition to all but $255m of the currently estimated cost of “about $1.1 billion”, “the state could also be responsible for cost overruns and other related costs, such as carparks and relocating heritage buildings”.”
Greens Treasury spokesman Vica Bayley said the state could ill-afford to take on more debt.
“Disturbingly, the ratings agencies also flagged concerns about capital costs and increasing debt leading to further downgrades, and specifically cited the risks of cost overruns for the Macquarie Point Stadium,” he said.
“This is yet more reason for MLCs to vote down the stadium when it comes to the Legislative Council next week.”
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Originally published as Tasmania hit by second credit rating downgrade in a single week
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