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NLIS 2
July 20, 2006
(Finance)
 

Newfoundland and Labrador receives third credit rating upgrade

On the heels of credit rating upgrades last month from Dominion Bond Rating Service (DBRS) and Moody�s Investors Service (Moody�s), Finance Minister Loyola Sullivan is pleased to announce the last of the three credit rating agencies which rate our province�s debt � Standard & Poor�s Rating Services - has followed suit by providing Newfoundland and Labrador with another upgrade.

Late Wednesday, July 19, Standard & Poor�s announced it was upgrading the province�s credit rating to �A� with a stable outlook; up from the previous rating of �A-.� Standard & Poor�s cited substantial improvement in overall budgetary performance in the past two fiscal years, reduction in net tax-supported debt, increased economic growth and a substantial reduction in the province�s large unfunded pension liabilities as the motivating reasons for the change.

�This is great news for our province and for all of the people who have worked so hard in this government to help us get us back on sound financial footing,� said Minister Sullivan. �These rating upgrades are integral to the success of our borrowing programs and greatly influence the decisions lending agencies make to invest in Newfoundland and Labrador.�

While Minister Sullivan acknowledges the province still has quite a ways to go before it emerges from the debt accumulated over the past decades, he says each rating change is a step in the right direction.

�We know where we have to go and every small step is an important one,� said the minister. �All three rating agencies now have our province in the �A� category. That is very significant.�
On June 6, 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 of those rating agencies credited the province�s decision to reduce its debt burden by funding the teachers� pension plan as a key rating consideration.

DBRS, Moody�s and Standard & Poor�s 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.

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

2006 07 20                                    9:25 a.m.


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