22 January 2016

DBRS downgrades government rating #nlpoli

DBRS issued a revised rating for the provincial government on Thursday.  It remains "A" but a change to trending from "stable" to "negative" for long-term debt.  DBRS' short-term debt rating remains R-1 (Low) with a stable outlook.

In a news release, "DBRS has also confirmed the Guaranteed Long-Term Debt ratings of Newfoundland and Labrador Municipal Financing Corporation and Newfoundland and Labrador Hydro at “A” and has changed the trends to Negative from Stable."
"...DBRS believes that the Province’s ability to implement a fiscal response sufficient to slow the deterioration in the credit profile is limited. Without a material improvement in the fiscal and debt outlook supported by a credible multi-year fiscal plan, a one-notch downgrade is likely."
That first sentence is chilling.  DBRS thinks the provincial government has a limited ability to do something about the financial mess to slow the deterioration in the provincial credit profile.  The result would be a lowering of the province's credit rating by one level.  Obviously, if the government will face more rating down-grades if it comes up with a less-than-satisfactory fiscal plan.

That should be a figurative kick in the balls to the Premier and his senior advisors. They  have been peddling the foolish line for the past few months that they won't raise taxes, cut spending, or tolerate any layoffs. That won't work, unless Dwight plans to be the second coming of Fred Alderdice.