Peterborough maintains AA credit rating

Backtracking on policies to diversify economy could lead to rating being cut in the future, warns Standard & Poor’s

The City of Peterborough’s credit rating held steady at AA with a stable outlook in the latest report by the municipality’s bond rating agency.

But the rating comes with a bit of a warning for new Mayor

Diane Therrien’s administration: “Although we view it as unlikely in the outlook horizon, we could take a negative rating action in the next two years if we see weakening consensus to implement economic policies, evidenced by backtracking on progress to diversify the local economy, increase land supply and attract private investment.”

The Standard & Poor’s credit rating sheet was released Tuesday. City finance committee chairman Coun. Henry Clarke was pleased with the stable rating.

“I’m absolutely thrilled and delighted,” Clarke stated.

“The ratings reflect S&P’s confidence in the City of Peterborough’s public policies that sustain its fiscal sustainability, exceptional liquidity and low debt levels.”

In a two-year outlook, Standard & Poor’s forecast the city will “maintain operating surpluses of about 15 per cent of operating revenues, while capital expenditures at about 25 per cent of total spending will keep deficits after capital expenditures close to 5 per cent of total revenue. We also expect tax-supported debt will represent less than 50 per cent of operating revenues by 2020.”

The report notes the city’s “somewhat slow economic prospects compared with those of peers will continue to necessitate high investment levels in capital projects to improve the city’s connectivity and attract private investment.”

The report also made note of how Peterborough’s median total household income of $58,127 in 2015 was below the provincial media of $74,287.

“We view Peterborough’s economic profile as weaker than that of peers because of its relative remoteness, aging population, and ongoing shortage of available industrial land, which limits the economy’s ability to support growth,” the report states.

The report predicts the city will renew its efforts in 2019 to annex land from other municipalities.

“We expect that following the municipal election on Oct. 22, the alignment between council and the financial administration will continue to produce political consensus to implement reforms and maintain sustainable fiscal indicators,” the report states.

“Likewise, we expect continuity in the city’s commitment to its internal debt limit and to using only short-term debt, which is being on-lent to Peterborough’s housing corporation. The city has made progress on long-term economic constraints, such as the shortage of industrial land, by advancing a proposal to annex properties. We expect that these efforts will resume in 2019 under a moderately renewed council.”

The credit rating report is issued annually from S&P, a financial services company that offers services including credit ratings, data analysis and equity research to both the private and public sectors worldwide, according to a release from the city.