I love government spin. It’s fun:
New Brunswick had its debt rating cut by one level to Aa2 by Moody’s Investors Service Ltd. because the Canadian province will record a “sizable” increase in its borrowing over four years, the rating company said.
The downgrade will affect about C$11.2 billion ($10.4 billion) of the province’s debt, Moody’s said in a statement today. The rating company also said the province’s rating outlook is stable.
The province’s financing requirements will rise to C$1.2 billion in the 2010 fiscal year and C$1.4 billion in 2011, Moody’s said. This will increase its debt-to-revenue ratio to 150 percent after a four-year fiscal plan is implemented, compared with 106 percent in 2009. The province, home to about 747,000 residents, will record deficits equivalent to 10 percent of its revenue over the next four years.
The credit downgrade was the first action by Moody’s since it boosted New Brunswick’s grade to the second-highest rating of Aa1 in November 2006, up two levels from the previous Aa3.
New Brunswick maintains its leadership spot in having the highest overall credit rating of any province east of Ontario, despite a Moody’s Investors Service revised credit rating from Aa1 to Aa2 issued on Monday, Aug. 24, acting Finance Minister Jack Keir said today. The province’s rating has a stable outlook, according to Moody’s. Both Dominion Bond Rating Service and Standard & Poor’s recently maintained the province’s ratings at A (high) and AA-, respectively, with stable outlooks from both.
So which one is it? A ballooning of the debt-to-revenue ratio up 43 percentage points over four years, 10% deficit to revenue ratio and a debt rating cut (the first since 2006) or a prudent, leadership spot?
I guess we shall see how the media spins this one tonight and tomorrow.