Newspaper article The Canadian Press

Moody's Downgrades Ontario's Credit Rating: Moody's Downgrades Ontario's Credit Rating

Newspaper article The Canadian Press

Moody's Downgrades Ontario's Credit Rating: Moody's Downgrades Ontario's Credit Rating

Article excerpt

TORONTO - Ontario's minority Liberal government is downplaying a decision by Moody's Investors Service to downgrade the province's debt rating, citing the cash-strapped province's growing debt burden and risks in achieving its fiscal plan.

The government, which is facing a $15-billion deficit this year, tabled a budget last month outlining a plan to re-balance the books in 2017-18. It includes limiting spending increases to just one per cent a year for the next five years.

The New Democrats allowed the budget to pass its first major hurdle in the legislature Tuesday after brokering a deal with the Liberals that included hiking taxes for the rich.

But Moody's expressed concern Thursday about the government's ability to rein in spending and stay on track to achieve a balanced budget.

"The downgrade of Ontario's rating reflects the growing debt burden and the risks surrounding the province achieving its medium-term fiscal plan given the subdued growth outlook, extended timeframe back to balance and ambitious expenditure targets," Jennifer Wong, Moody's lead analyst for Ontario, said in a release.

The province's expense growth targets appear to be "particularly ambitious," given the average seven per cent annual growth in expenses over the last five years, Moody's said.

As a result, it's downgrading Ontario's issuer and debt rating to Aa2 with a stable outlook from Aa1 with a negative outlook, affecting $202 billion in debt securities.

The downgrade came after Moody's put Ontario on credit watch last fall.

Over the last week, two other credit agencies have weighed in on the province's debt rating. DBRS maintained its "stable" outlook Thursday, just a day after Standard and Poor's revised its outlook from "stable" to "negative."

The Progressive Conservatives, who voted against the budget, warned the Moody's downgrade would have major consequences for a province that's already mired in debt.

"It means that $202 billion in paper -- which means Ontario debt -- could be affected very shortly by higher interest rates, and therefore larger cost and a larger piece of the budget which has not been allocated for it," said Tory finance critic Peter Shurman. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.