S&P puts Australian state of Victoria on negative ratings watch

FILE PHOTO: Fire Services Victoria members write each other's names on their hazmat suits as they prepare to enter a public housing tower, locked down in response to an outbreak of the coronavirus disease (COVID-19), in Melbourne, Australia, July 8, 2020. REUTERS/Sandra Sanders

S&P Global Ratings on Wednesday said it had placed the AAA long-term rating for Australian state Victoria on CreditWatch with negative implications, reflecting the latest coronavirus lockdown there.

S&P said there was an increasing possibility it would lower the rating within the next few months when there was greater clarity about the fiscal effect of the lockdown, government policy direction and the state's ability to control the outbreak.

"We expect to lower our long-term rating on Victoria if we consider its fiscal repair would be delayed beyond our base-case expectations," the agency said in a statement.

"This could occur if the COVID-19-related economic contraction is more prolonged or severe than we currently expect. This may also come if our view is that the state's financial management is weakening."

S&P added that it had affirmed the A-1-plus short-term rating on Victoria.

(Reporting by Wayne Cole)