Rating Agencies Confirm Nova Scotia Credit

Four credit-rating agencies have now reaffirmed their ratings for the province of Nova Scotia.

The latest are two major international firms, Moody's Investors Service and Standard and Poors. Both released their reports in recent days. The Dominion Bond Rating Service and the Canadian Bond Rating Service released their reports several weeks ago.

"We view this as a positive sign and a vote of confidence in our future" said Finance Minister Neil LeBlanc. "We also understand that continued investment in our province depends upon a firm financial foundation for the government and that also requires us to deliver on our commitment to balance the budget."

He said the rating decisions represent a "reprieve for the province" while the government gets its financial house in order.

"Each of the rating reports stressed that they expect the government to take significant steps to reduce the deficit in the next budget," said Mr. LeBlanc. "They also expect us to eliminate it, as planned, when budget 2002-03 is tabled.

"We view this commitment as fundamental to the continued financial health of this province," he said. "Failure to meet this challenge would undoubtedly have a negative impact on our ability to borrow money at a reasonable cost."

Nova Scotia is currently forecasting a deficit of about $500 million in fiscal 1999-2000. This shortfall is funded by issuing bonds.

The interest cost on the bonds is directly related to the credit rating assigned by the agencies. A negative change in the rating could increase the cost of borrowing by restricting the province's access to some lenders. That would mean less money for future programs.

The province also needs to regularly refinance a significant portion of its existing debt. The net direct debt of the province is forecast to exceed $10 billion by March 31, 2000.

Each of the rating firms have their own system. Their current credit ratings for the province are as follows: Moody's Investors Service A3 Outlook Stable Standard and Poors A- Outlook Stable Dominion Bond Rating Service BBB+ Outlook Stable Canadian Bond Rating Service A low Outlook Negative