S&P has downgraded the city of Edmonton’s credit rating to AA.
David Bloom / Postmedia
The City of Edmonton’s credit rating has dropped for the first time in 15 years.The city said in a Friday press release credit rating agency Standard & Poor’s has assigned the city a credit score of AA for 2019. Although the third-highest rating, the AA score is a downgrade from the city’s previous AA+ rating, where it has sat since November 2004, according to information provided by a city spokeswoman on Friday.The downgrade was as a result of the city’s growing debt burden to fund more infrastructure spending, S&P told the city, according to the city press release. The 2019 $4.8-billion capital budget includes upgrading Yellowhead Trail to a freeway, funding the Valley Line LRT to west Edmonton, work on the Coronation recreation centre, Terwillegar Drive improvements, and more.The city’s credit rating does not affect the city’s borrowing rates, said city spokeswoman Melissa Lovatt. The city borrows through the Alberta Capital Finance Authority using the Alberta’ government’s rates. Interest rates are fixed for the terms of the loans, she said.S&P did warn Edmonton last year it could face a credit rating downgrade for boosting borrowing.“Our level of debt is not a direct indication of the city’s overall economic stability,” Stacey Padbury, Acting Chief Financial Officer, said in the release. “We don’t run a deficit and while the city’s capital plan has had an impact on its credit rating, we must continue to make these critical investments in Edmonton’s future.”The agency also rated the city’s financial management and liquidity the strongest on a five-point scale, the news release said. Economic growth in Edmonton is likely to increase tax revenue and nudge the credit rating back up during the next two years.Although governments often receive credit ratings from multiple agencies, the city of Edmonton only obtains ratings from S&P, Lovatt said.More to come