Long-term debt rating for B.C. and B.C. Hydro’s long-term debt obligations remain AA (high), says DBRS Morningstar
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The B.C. economy has been given a thumbs up by global credit-rating agency DBRS Morningstar.
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According to a rating released by the agency on Wednesday evening, the long-term debt rating for B.C. remains AA (high), while B.C. Hydro’s long-term debt obligations also remain AA (high).
These credit ratings are used by financiers to determine the rate at which corporations or government can borrow money through issuing bonds and go from AAA to C.
The higher the rating the less companies or government have to pay for money, and the less they have to pay to investors seeking a safe haven for their cash. Government bonds are considered a very safe asset.
The agency painted a strong picture of the B.C. economy, stating the province has underlying economic diversity and strength and “disciplined fiscal policy … combined with considerable fiscal flexibility and a strong balance sheet.”
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DBRS Morningstar is the fourth-largest credit ratings agency in the world and is a service used by investors.
The stable rating comes despite the province suspending its balanced budget requirement and predicting deficits (more spending than earning) of $4.2 billion and $3.2 billion for 2023-24 and 2025-25.
This amounts to 2.1 per cent and 1.6 per cent of GDP for those years.
“Despite this seemingly relaxed approach to balanced budgets, the significant level of prudence leaves room for outperformance as has been B.C.’s trademark,” the statement read, referring to B.C. usually posting less of a deficit than predicted.
The agency said that despite the pandemic-driven deficits (exacerbated by the November 2021 flooding and earlier heat waves) B.C. continues to have one of the lowest debt burdens (per capita) among Canadian provinces.
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As of 2021-22, B.C. has a debt of $61.7 billion.
The agency expects B.C.’s economy to grow by four per cent this year, followed by 2.5 per cent in 2023.
The forecasts were made on the assumption the economy continues to return to pre-pandemic levels.
The largest credit-rating agency in the world – Standard and Poors – gave B.C. an AA+ rating for 2022 in a report issued in April, which was also a stable rating.
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Everything AA-OK for B.C. economy, says credit agency - Vancouver Sun
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