Moody's Tasmania debt rating drops

Ratings agency Moody's has downgraded Tasmania's debt rating from Aa1 to Aa2.

But the shift, published on Thursday, coincides with a changed outlook for the island state to stable from negative which reflects an expectation that Tasmania will continue to post moderate debt levels and an associated low interest burden.

"Moody's anticipates that Tasmania will record widening deficits due to a combination of slowing revenue growth and expectations that the state's forecast of nearly flat levels of spending are unlikely to be realised," the agency said in a statement.