EDMONTON – Alberta Finance Minister Joe Ceci has received some bad news on the first day of a trip to meet with investors and credit-rating agencies.
Ceci is in Toronto and it was during one of those meetings that Moody’s Investor Services downgraded Alberta’s credit rating to double-A1 from triple-A.
Moody’s cited the Alberta government’s growing and unconstrained debt burden and extended timeline to get its books back in the black.
It also said the outlook for growth is subdued.
As well, the province forecasts oil prices to be higher than what Moody’s is predicting.
Ceci says he’s disappointed with the downgrade, but the province is committed to getting costs under control and Alberta is still a great place to do business.
“The province’s bond holders have long priced the effect of volatile resource revenue into the market,” Ceci said in a release Monday.
“The yield on Alberta 10-year notes in May 2015 was 2.37 per cent, while today it is 2.38 per cent. This fiscal year, we expect to spend 2.4 per cent of our budget revenue on debt servicing.
“By comparison, British Columbia will spend 5.5 per cent and Ontario is expecting to spend nine per cent of its budget revenue on interest charges.”
Ceci also has meetings planned in New York later this week.
A day after the April 14 budget, credit-rating agency DBRS downgraded the province’s rating a notch to double-A from triple-A over the NDP government’s debt levels.
The budget includes a $10.4-billion deficit this year and forecasts the province will face a $58-billion overall debt within three years.
Derek Fildebrandt, finance critic for the Opposition Wildrose, says Ceci’s travels will do nothing to restore Alberta’s credit rating. He says that will only come once the government has a clear plan to control spending and balance the budget.