Al­berta down­graded by credit rat­ing agency

Calgary Herald - - CITY + REGION - AMANDA STEPHEN­SON astephen­son@post­ Twit­­damsteph

Credit rat­ing agency DBRS Morn­ingstar has down­graded the prov­ince of Al­berta due to plung­ing oil prices and the COVID-19 out­break.

DBRS said in a re­lease Thurs­day evening that it has down­graded Al­berta’s Is­suer Rat­ing and Longterm Debt rat­ing to AA (low) from AA and its Short-term Debt rat­ing to R-1 (mid­dle) from R-1 (high). In ad­di­tion, DBRS Morn­ingstar changed the trend on the prov­ince of Al­berta’s Short-term Debt

to Sta­ble from Neg­a­tive.

Ac­cord­ing to the rat­ings agency, if cur­rent global eco­nomic conditions and the sharp de­cline in oil prices are sus­tained, they will have a “ma­te­rial im­pact on the provin­cial eco­nomic ac­tiv­ity and pub­lic fi­nances of Canada’s main oil and gas-pro­duc­ing prov­inces.”

DBRS es­ti­mates Al­berta’s 202021 deficit (on an ad­justed ba­sis) may ex­ceed four per cent of GDP and that the ad­justed debt-to- GDP ra­tio may rise above 30 per cent in 2020-21 alone.

“Not­with­stand­ing th­ese es­ti­mates, there is un­cer­tainty with re­spect to the cur­rent sit­u­a­tion and Al­berta has yet to out­line a full fis­cal pol­icy re­sponse,” DBRS said.

The rat­ings agency said Al­berta main­tains am­ple liq­uid­ity to with­stand near-term mar­ket volatil­ity, with more than $4 bil­lion in cash and $16 bil­lion in less liq­uid in­vest­ments within the Al­berta Her­itage Sav­ings Trust Fund and other en­dow­ments.

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