Dominion Bond Rating Service Upgrades Provincial Credit Rating

A second major bond rating agency has upgraded Nova Scotia's credit rating.

Today, Aug. 14, Dominion Bond Rating Service increased the province's long-term rating to A from A (low), with a stable outlook.

Earlier this month, Moody's Investors Service also upgraded the province's long-term rating to A1 from A2, with a stable outlook.

"I am pleased that Nova Scotia's good management and economic outlook is once again being acknowledged," said Premier Rodney MacDonald. "We remain committed to our fiscal plan. This is the last fiscal year that Nova Scotia's debt will grow."

In a news release, the rating agency cited a number of factors that have contributed to improved financial results for Nova Scotia including:

• ongoing fiscal prudence with support from the province's debt reduction plan
• applying the $830 million from the Atlantic Accord to the debt
• debt-to-GDP ratio at its lowest level in over 15 years and this trend is forecast to continue
• the joint trusteeship agreement with the teachers' pension, and
• expected revenue growth due to economic growth, high oil prices and rising federal transfers.

Dominion Bond Rating Service noted that, while a close watch on health and education spending pressures will have to be maintained, "the province's strong commitment to fiscal prudence, as highlighted by the debt retirement plan, and track record of improving its credit profile provide comfort that the medium-term fiscal plan is achievable."

"This is welcome news," said Finance Minister Michael Baker. "We have been working hard to balance our budgets and be fiscally responsible, and it is good to see our financial performance recognized."

A higher credit rating makes the province's bonds more attractive to investors and helps lower the overall cost of borrowing. Even with a balanced budget, the province must borrow money to refinance existing Nova Scotia debt.