A more cynical view of the country's banking sector is a key rationale on a rethink on the outlook for New Zealand's sovereign rating by Fitch Ratings.Fitch said it "revised to negative the New Zealand banking sector outlook, an assessment of the underlying fundamental trend in the industry as a whole, capturing the operating environment."It said "the revision reflects a potential deterioration in asset quality caused by the softening economic environment, particularly in the dairy sector. A second season of low dairy prices has affected the debt servicing ability of farmers, with around half of the dairy sector estimated to be facing negative cash flow during the 2014-15 season."Fitch point out that delinquent loans have remained low so far, as banks have supported farmers deemed to be viable. "However a prolonged period of low dairy prices could lead to a rise of non-performing loans from the sector, as well as sharper cutbacks in production and investment."Fitch said it revised the outlooks on New Zealand's long-term foreign and local currency issuer default ratings to stable from positive. It affirmed New Zealand's long-term foreign currency rating at AA and the local currency rating at AA+.The news from the dairy sector was again negative yesterday, Sean Keane from Credit Suisse wrote in a daily commentary.New Zealand's second largest dairy co-operative, Westland Milk, lowered its forecast payout for 2015/16 by between 15 and 25 per cent. Westland cut its payout forecast from NZ$4.90-5.30 down to NZ$4.15-4.45, and it warned its farmers that prices are likely to remain low into the second half of 2016.