The City of Calgary has passed the latest round of credit rating reviews from global rating firms S&P and DBRS Morningstar, retaining high credit ratings from both organizations.
S&P formally gave their AA+ issue creditor rating to the City on July 13, while DBRS gave an AA (high) and R-1 (high) rating to long-term debt and commercial paper.
“The ratings are supported by the City’s approach to fiscal management, its relatively low debt burden, and its robust liquidity. However, Calgary’s credit profile is vulnerable to volatility in the global energy markets,” wrote DBRS.
“All trends are Stable.”
An AA+ rating is between S&P’s AA and AAA ratings, with reflect a mid-range position between “Very strong capacity to meet financial commitments,” and “Extremely strong capacity to meet financial commitments,” according to the firm.
DBRS rates an AA rating as having superior credit quality, with a high capacity to repay financial obligations. The firm’s R-1 rating for commercial paper is the highest rating, with “the capacity for the payment of short-term financial obligations as they fall due is exceptionally high,” and payments “unlikely to be adversely affected by future events.”
High credit ratings reduce borrowing costs for City, reduced cost for taxpayers
Les Tochor, Acting Chief Financial Officer for the City of Calgary, said that the ratings from the firms reflected careful financial planning by the City.
“The positive credit ratings are an achievement made possible through careful decision making and dedication of all City staff,” Tochor said.
“The City’s continued positive credit ratings and independent third-party outlooks save Calgarians money by helping reduce borrowing costs for The City.”
DBRS said that they expect to see continued growth in Calgary’s economy in the medium term, although they expect to see some long term slowing in growth as a result of the global financial position taken by Central Banks to keep policy rates high.
The firm also took the position on the latest round of budget decisions by council, saying that although there was increased spending in priority areas, this did not alter the city’s fiscal direction.
“The Council’s priorities are largely consistent with the prior four-year budget plan but at the same time reflect investments essential toward economic and infrastructure needs,” wrote DBRS.
The City’s AA+ rating was first issued by S&P in 2004.
In a comparison with other major Canadian municipalities, S&P ranked Calgary as having top-level scores for institutional frameworks, fiscal management, budgetary performance, and liquidity. It ranked the City highly for the economy, and mid-range for debt burden.
The City of Edmonton in the latest review period received an AA rating from S&P.
