Alberta downgraded by credit rating agency
Credit rating agency DBRS Morningstar has downgraded the province of Alberta due to plunging oil prices and the COVID-19 outbreak.
DBRS said in a release Thursday evening that it has downgraded Alberta’s Issuer Rating and Longterm Debt rating to AA (low) from AA and its Short-term Debt rating to R-1 (middle) from R-1 (high). In addition, DBRS Morningstar changed the trend on the province of Alberta’s Short-term Debt
to Stable from Negative.
According to the ratings agency, if current global economic conditions and the sharp decline in oil prices are sustained, they will have a “material impact on the provincial economic activity and public finances of Canada’s main oil and gas-producing provinces.”
DBRS estimates Alberta’s 202021 deficit (on an adjusted basis) may exceed four per cent of GDP and that the adjusted debt-to- GDP ratio may rise above 30 per cent in 2020-21 alone.
“Notwithstanding these estimates, there is uncertainty with respect to the current situation and Alberta has yet to outline a full fiscal policy response,” DBRS said.
The ratings agency said Alberta maintains ample liquidity to withstand near-term market volatility, with more than $4 billion in cash and $16 billion in less liquid investments within the Alberta Heritage Savings Trust Fund and other endowments.