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NLIS 4
June 6, 2006
(Finance)
 

Newfoundland and Labrador receives two credit rating upgrades

Finance Minister Loyola Sullivan is pleased to announce Dominion Bond Rating Service (DBRS) and Moody�s Investors Service have both upgraded Newfoundland and Labrador�s credit rating this week, indicating the moves were because of the province�s recent sound fiscal management and debt reduction initiatives.

DBRS increased the province�s credit rating to A (low) with a stable outlook, from BBB (high); while Moody�s increased their rating from A3 to A2, also with a stable outlook.

Both agencies cited the province�s decision to reduce its debt burden by funding the teachers� pension plan as a key rating consideration.

Minister Sullivan said the rating changes are important to the success of government�s borrowing programs and lending agencies decisions to invest in the province.

"We have worked very hard to put this province�s finances back on track and are proud to have achieved these rating increases," said Minister Sullivan. "These increases show the credit rating agencies are paying close attention to what we are doing here in our province and the way we are managing our finances and reducing our debt. We welcome the feedback."

DBRS and Moody�s are both independent major Canadian credit rating agencies. The third Canadian rating agency is Standard and Poor�s Corporation which currently rates the province at A-. All three rating agencies now have Newfoundland and Labrador in the "A" category. The rating agencies regularly examine the financial health of governments in order to determine risk associated with the issuance of government bonds. The higher the government's credit rating, the lower the risks associated with borrowing, and the less government has to pay in interest costs on its debt.

While DBRS and Moody�s mentioned that Newfoundland and Labrador will continue to face budgetary challenges, the long-term picture is promising and the agencies have confidence in the province�s financial outlook.

"We have been able to provide what the people of the province need by funding infrastructure, health care services, access to education and more, while still reducing our debt burden for the generations to come," said Minister Sullivan. "We still have a ways to go but this is a serious indication that we are indeed heading in the right direction."

Media contact: Deborah Pennell, Communications, (709) 729-6830, 685-6612, deborahpennell@gov.nl.ca

2006 06 06                          11:50 a.m.


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