By Graeme MacKay, The Hamilton Spectator, Friday April 27, 2012
Moody’s debt-rating downgrade sour news for Ontario
A community group pushing the city to take another look at its ward boundaries has successfully collected the 500 Just two days after the McGuinty Liberals’ first minority government budget passed a crucial vote, one of the world’s major credit rating agencies downgraded Ontario, citing the province’s swollen debt burden and tough economic times ahead.
Moody’s Investors Service’s decision Thursday to downgrade Ontario followed a stern warning and dimmer outlook issued one day earlier from Standard & Poor, another influential credit rating agency.
Finance Minister Dwight Duncan acknowledged that the move by Moody’s was serious but he also attempted to play down the sour financial news. Moody’s downgrade could make Ontario’s government bonds less attractive to investors and could also make it more expensive to borrow money at a time when the province’s debt is mounting.
Progressive Conservative finance critic Peter Shurman suggested the rating drop was “catastrophic for Ontario,” but Mr. Duncan said he expects the effect will be minimal.
“We’re still in the top echelons of credit ratings,” Mr. Duncan noted. “It [the downgrade] reminds us that it’s important that we continue to meet our targets or we risk paying more money to bond holders instead of for schools and for health care.”
Moody’s downgrade of the province’s debt rating to Aa2 with a stable outlook from Aa1 with a negative outlook brings the agency’s score more in line with S&P and DBRS, which both downgraded Ontario by one notch in the fall of 2009. DBRS, which also weighed in Thursday on Ontario’s fiscal state, decided to maintain its “stable” outlook on its debt rating for Canada’s largest province, saying the government’s increased focus on controlling spending was “an encouraging step in the right direction.” (Source: Globe & Mail)