2 rating agencies downgrade British Columbia due to COVID-19 debt – .

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2 rating agencies downgrade British Columbia due to COVID-19 debt – .


VANCOUVER – Two credit rating agencies have downgraded their ratings for the province of British Columbia in recent weeks, citing pandemic-induced deficits and the resulting increase in long-term debt as the reasons for this decision.

On Wednesday, S&P Global Ratings announced its change, lowering the provincial rating from AAA to AA +. Fitch Ratings made a similar move on June 25.

“The rating action reflects Fitch’s expectation that the province’s debt burden will increase dramatically over the next several years as it grapples with the economic and fiscal disruption caused by the pandemic,” the latter wrote. agency in its update.

Fitch also cited the “rapid rise” in federal government borrowing during the pandemic as a factor increasing his rating of British Columbia.

Fitch and S&P both described their outlook for the province as “stable” and said they expected British Columbia’s finances to improve as COVID-19 vaccination rates increase and economic conditions return to normal.

However, S&P notes in its “bearish scenario” that a weaker than expected economy or large and sustained deficits could lead to a further downgrade in BC’s credit rating.

“We could revise the outlook to negative or lower the ratings over the next two years if a resumption of weakening economic conditions or poor fiscal policy choices derail the province’s fiscal recovery path,” writes S&P in his analysis.

Asked to respond to the latest downgrade, British Columbia Finance Minister Selina Robinson issued an email statement.

“The province remains the highest rated among all provinces by each of the major international and national rating agencies, including S&P, despite this review,” said Robinson. “S&P shares our expectation that British Columbia will experience a solid rebound in 2021 and 2022, and this strong recovery will help us move forward. “

The minister noted that British Columbia entered the pandemic in “a strong financial and fiscal position,” and called the investments the province has made to fight COVID-19 and support businesses as “the right thing. to do “.

“British Columbia’s recovery will not happen overnight, but we are focusing on the opportunities that come with the recovery and we are on the path to creating a more sustainable, inclusive and innovative economy.” , she said.

The most recent ratings from other agencies posted on the province’s website show no change in BC ratings.

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