Credit rating agency DBRS downgrades Alberta rating a notch on rising debts

CALGARY – Credit rating agency DBRS has downgraded Alberta’s credit rating a notch to double-A, less than 24 hours after the province released a deficit-laden budget.

DBRS says the NDP government’s reluctance to rein in spending or increase taxation would push debt levels higher than a triple-A rating could justify.

The projected debt will reach $57.6 billion in two years, according to the 2016 provincial budget tabled in the legislature on Thursday.

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Finance Minister Joe Ceci described the downgrade as a “disappointment” but said the province is still financially stable and responsibly managing its debt.

But some credit analysts say the Notley government would be hard-pressed to get approved for a consumer loan at most financial institutions.

“I don’t see a bank or lender that would give them financing, because they are spending more than they are making,” credit specialist Richard Moxley said. “And the amount of debt that they are proposing they are going to get into far exceeds what they will be able to pay back in the short-term.”

In its credit update DBRS did improve the province’s outlook to stable from the negative reading in January, thanks to higher oil prices and slower than expected growth in debt.

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Moody’s, in its response to the budget, maintained its triple-A rating for the province, but said rising debt levels and weakened fiscal circumstances will exert growing pressure on the rating.

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In December, Standard and Poor’s downgraded Alberta’s rating to double-A-plus from triple-A.

With files from Global’s Gary Bobrovitz