It’s hard to find good economic news these days, but sometimes the good news finds you. In a media release on Tuesday, the City of Guelph announced that under the new framework of Standard & Poor’s Global, the credit agency responsible for assigning the credit rating for Canadian municipalities, Guelph has a AAA rating, but don’t pop the champagne cork just yet because there’s a catch!
The catch is that the move to a AAA score still has to be affirmed when the annual review of Guelph’s credit status is released this August, but we’re in the proverbial strike zone for the update. The AAA rating is the highest credit rating that a municipality can obtain from the S&P, and Guelph’s likely upgrade comes after nine years of being rated AA+.
“We know that Guelph is well-positioned to stay financially stable due to prudent financial management that allowed us to weather the challenges of the pandemic and positions us well to manage the inflationary pressures now facing economies across the globe,” said Deputy CAO for Corporate Services Trevor Lee in a statement.
“An upgrade to our credit rating is always good news and an AAA rating is the highest rating a municipality can receive,” added Tara Baker, City Treasurer and General Manager of Finance. “We look forward to having this newly upgraded rating reaffirmed as part of our annual credit rating review later this year.”
S&P released the new framework after completing a periodic review saying that Canadian municipalities are generally “extremely predictable and supportive” as opposed to their previous analysis that they’re “very predictable and well balanced.” In other words, “municipalities will generally perform in line with our base-case expectations.”
“Canadian municipalities have demonstrated resilient budgetary performance over the years, including during the dual economic and fiscal shocks of the 2008 financial crisis and more recently, the COVID-19 pandemic,” said an S&P statement. “In times of stress, the municipalities have received exceptional support from senior levels of government. We believe that the financial strength we’ve witnessed to date is supported largely by the maturity and stability of the Canadian intergovernmental system.”
S&P cited “proactive cost-cutting” during the pandemic, and “direct extraordinary support” from senior levels of government for helping to protect the bottom line of municipalities. Even though that support is likely to stop coming in the years to come, the agency thinks that municipal government are sitting in a very stable position for the next several year.
The new framework has resulted in 21 municipalities getting a bump in their ratings, but the outlook on most ratings remains unchanged. Brampton, Durham Region, Essex County, Halton Region, Hamilton, Mississauga, Oxford County, Peel Region, Regina, Saskatoon, Vancouver, Wellington County, and York Region are the other municipalities who are AAA in Canada.