Alberta’s credit rating has been downgraded by U.S. based rating agency Standard & Poor’s (S& P) from AAA to AA+, reflecting projected “oil price-driven weak budgetary performances in the next two years” and rising debt.
Alberta Finance Minister Joe Ceci said the downgrade would have “little to no effect” on the province’s borrowing cost.
“It would have been great to keep it (at AAA), but I had the sense that we wouldn’t be when I met with them in person,” he said. “But if you read the report, they (also) talk about the good things that Alberta is doing.”
Though the report issued by S& P calls Alberta’s economic prospects “average,” it does cite the province’s “exceptional liquidity, very strong financial management, still strong economy” as well as “low contingent liabilities” as being positives to the rating.
“The stuff that wasn’t so great is the price of oil and how reliant our economy still is on oil and gas,” Ceci said. “That’s why, in Budget 2015, we took steps to show how we can diversify our economy.”
Airdrie Wildrose MLA Angela Pitt said the downgrade should serve as a “wake up call” to the NDP.
“This raises the cost of services for every person in Alberta, and sends a signal to investors that Alberta is a less friendly place to invest,” she said. “The (NDP government) needs to slow down and give their heads a shake. This is not good for anybody.”
Despite the downgrade from S& P, Alberta still currently is rated as AAA by Dominion Bond Rating Service (DBRS) and Moody’s Investor Service.
“Throughout Alberta we’re doing things that are acting on some of the challenges S& P identified,” Ceci said. “(DBRS and Moody’s) have both kept us at AAA. One agency looks at some highs, the others look at other aspects. (The reports) have confirmed we’re a really stable province.”
Prior to the rating from S& P, Alberta had received an AAA credit rating from all rating agencies since 2001. The only two provinces currently rated AAA by S& P are British Columbia and Saskatchewan.
