Alberta budget confirms province’s credit rating upgrade from ‘negative’ to ‘stable’

Alberta’s financial outlook continues to improve, as illustrated in this week’s budget, according to global credit agency DBRS Morningstar.

The company released comments on the Kenney government’s second pandemic budget on Friday, saying conditions continued to improve thanks to rising revenues and “demonstrated spending restraint.”

“In December 2021, DBRS Morningstar changed the trend for Alberta’s issuer rating and long-term debt rating from stable to negative, and this budget reaffirms that the erosion of Alberta’s credit profile ‘Alberta has ceased,’ the company wrote in a statement.

In its comments, DBRS says Alberta’s net debt continues to decline, with high energy prices being the main driver of this change.

“On an adjusted basis, DBRS Morningstar forecasts the debt-to-GDP ratio to fall to 26% by 2022-23, which would mark the second year of decline, after peaking at 34.8% in 2020-21. maintained, the DBRS Morningstar-adjusted debt-to-GDP ratio is expected to approach 23% by 2024-25,” the company said.

Increased activity in the energy sector is not the only factor that has improved Alberta’s situation, he adds.

“Investment in non-energy sectors continues to grow. This is supported by recent announcements including those from Amazon Web Services regarding its plans to open a cloud computing center in Calgary and Northern Petrochemical Corporation regarding a planned petrochemical plant in Grande Prairie.

However, while news about Alberta’s credit rating is promising, DBRS says it will be some time before it increases further.

“While the improvement in provincial finances demonstrated by this budget is beginning to restore flexibility in current ratings, it is unlikely to translate into a positive ratings measure in the near term.”

The Alberta government, in response to a request for a statement on the DBRS comment, said the positive outlook shows the 2022 budget is “moving Alberta forward.”

“We have made great strides in maintaining our net debt-to-GDP ratio among the lowest in the country, aligning our spending with peer provinces, and diversifying our revenue base,” said Kassandra Kitz, Senior Press Secretary from Alberta. Treasury Board and Finance.

“We are pleased to see DBRS acknowledging these efforts in its latest update.”

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