Moody’s downgrades Alberta

Moody’s Investors Service said it downgraded the province of Alberta’s long-term debt ratings to Aa3 from Aa2. Concurrently, Moody’s downgraded to Aa3 from Aa2 the long-term debt ratings of Alberta Capital Finance Authority and the long-term issuer rating of ATB Financial, reflecting their status as agents of the crown and the provincial guarantee of all their liabilities.

Moody’s revised all the outlooks to stable. This rating action concludes the rating under review started on Aug. 31, the agency said.

“The downgrade reflects elevated idiosyncratic risks, including a forecast of multiple years of material deficits and an elevated debt burden, as well as a structurally weaker credit profile as a result of the continued twin negative economic and fiscal shocks on the province from weak oil prices and the coronavirus pandemic, which Moody’s views as a social risk,” the agency said in a press release.

Moody’s said it estimates Alberta’s consolidated deficit, on an adjusted basis, will reach 57% of revenues in 2020-21, the highest forecasted deficit among Canadian provinces this year. “The projected deficit is more than twice the size of the largest deficit recorded by the province since the global financial crisis,” the agency said.

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