TORONTO, Jan 21 (Reuters) - DBRS cut its ratings trend for Alberta to negative from stable on Thursday, just three days after a similar move by rival ratings agency Moody‘s, in another sign of the strain that sinking oil prices have put on the Canadian province’s finances.
Toronto-based DBRS, which also affirmed Alberta’s AAA rating, said the move reflected its expectation “that the continued weakness in oil prices will contribute to a material erosion in the province’s fiscal performance and accumulation of debt.”
The decision comes as oil prices slump to a 2003 low below $28 per barrel.
Alberta’s left-leaning New Democratic government in October forecast it would post a C$6.1 billion ($4.23 billion) deficit this fiscal year and borrow heavily to fund infrastructure.
Alberta Finance Minister Joe Ceci said in a statement after the DBRS move that the province will limit its debt to 15 percent of gross domestic product but still spend to help absorb the shock of volatile commodity prices.
“While we don’t control oil prices, we do control our response. Our government will work to find efficiencies, but we will not make reckless cuts that would simply make a bad situation worse,” he said in a statement.
$1 = 1.4415 Canadian dollars Reporting by Jeffrey Hodgson; Editing by Chizu Nomiyama