Australia's AAA credit rating safe: S&P

CANBERRA - Australia's AAA credit rating is safe, despite its foreign debt is a worry, ratings agency Standard and Poor's (S&P) said in a new report on Australia released on Wednesday.

The global credit rating agency, which rates Australia triple-A with a stable outlook, said Australia stands out among its peers for its weak external position, created by persistent current account deficits over decades.

"The economy holds a large amount of offshore debt, households retain substantial debt because of high house prices and its banks are reliant on foreign investor funding," Associate Director Craig Michaels said in a statement.

"Although these weaknesses may pressure the sovereign ratings in a downside scenario, they appear to be largely mitigated for now."

According to the report's analysis, the biggest risks to Australia come from a potential hard landing for China's economy and any sudden negative shift in foreign investor sentiment. China is Australia's biggest trading partner and a large buyer of bulk commodities including iron ore and coal.