Ontario debt downgraded on 'very weak' budgetary performance

Mon Jul 6, 2015 5:11pm EDT
 
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OTTAWA, July 6 (Reuters) - The "very weak" budgetary performance and "very high" debt burden of the Canadian province of Ontario has forced a downgrade of its long-term debt, Standard & Poor's said on Monday.

The long-term issuer credit and senior unsecured debt ratings of Canada's most populous province, the industrial and financial heartland, declined to A+ from AA-, while the short-term and commercial ratings of A-1+ remained.

S&P credit analysts Daniela Brandazza and Mario Angastiniotis said the Ontario economy was wealthy and the government had strong financial management and a predictable institutional framework.

"But despite this ... we believe the province's credit quality has deteriorated due to consistently very weak budgetary performance and very high debt levels," they stated.

It acknowledged that Ontario expects to close its operating gap by fiscal 2018 but said it would still have to contend with sizeable yearly after-capital deficits.

The agency sees the budget deficit after taking into account capital spending at 11.2 percent in fiscal 2015, 9.0 percent in fiscal 2016 and 8.0 percent in fiscal 2017.

(Reporting by Randall Palmer; Editing by Tom Brown)