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Finance
July 22, 2013

Moody’s Renews Positive Credit Rating; Acknowledges Province’s 10-Year Sustainability Plan

In recognition of the Provincial Government’s commitment to long-term planning and expenditure control, Moody’s Investors Service has maintained the province’s Aa2 debt rating, with a stable outlook, in its latest credit analysis released today. The positive credit rating indicates that the province is judged to be of high quality and is subject to very low credit risk.

“While it is recognized that volatility in the province’s resource revenues presents budgetary challenges, Moody’s noted that the province’s net direct and indirect debt has fallen from 153.9 per cent of revenues in 2004 to an estimated 71 per cent at March 31, 2013,” said the Honourable Jerome Kennedy, Minister of Finance and President of Treasury Board. “Interest payments as a percentage of revenue also declined from the highest among Canadian provinces (16.1 per cent) in 2003-04 to an estimated 4.9 per cent in 2012-13.”

Moody’s noted that “Given the province’s economic and revenue structure, an upgrade of the province’s ratings would require continued strong fiscal performance, including a return to consolidated surpluses.” The province is projecting a return to surplus in 2015-16.

Moody’s highest rating is Aaa. Below that, Moody’s appends numerical modifiers 1, 2 and 3 to each rating classification from Aa through Caa. The modifier 1 indicates that the ranking in the higher end of its rating category. The province has received two credit upgrades from Moody’s since its A3 rating in 2002. In June 2006 the province was upgraded to an A2 credit rating. The rating was upgraded to Aa2 in November 2006.

In reference to the Provincial Government’s 10-year Sustainability Plan, the report states that “this commitment to long-term planning is considered credit positive, and could also lead to additional fiscal improvements not yet incorporated in the province’s projections.”

“Moody’s has recognized and commended our government’s continued efforts to reduce spending and to bring expenditure back to more sustainable levels,” said Minister Kennedy. “The report also notes our 10-year Sustainability Plan and commends our commitment to long-term planning.”

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Media contact:
Tansy Mundon
Director of Communications
Department of Finance
709-729-6830, 693-1865
tansymundon@gov.nl.ca

2013 07 22             3:30 p.m.

 
 
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