Australia Post has had its credit rating lowered as a result of declining letters business.

Standard & Poor’s has lowered the government-owned entity from AA to AA-minus with a negative outlook, suggesting its rating could fall further.

The global credit rating agency said the downgrade reflects the significant reduction in Australia Post’s profitability and increasing financial risk because of declining volumes in the core letters business.

“We expect these trends to persist in 2015,” S&P’s credit analyst Paul Draffin said.