B.C. Sees Triple-A Rating Stripped

British Columbia lost its top credit rating from S&P Global Ratings, which said provincial debt will rise sharply over the next few years because of the economic shock of COVID-19.

Canada’s westernmost province will run a deficit this fiscal year which is "significantly larger" than expected when the pandemic began, which will likely lengthen the time to return to fiscal balance, S&P said in a statement Wednesday explaining the one-notch downgrade to AA+. The move comes less than two weeks after Fitch Ratings took a parallel rating action.

Finance Minister Selina Robinson presented a budget in April that projected a budget deficit of $9.7 billion in the current fiscal year, ending March 31, 2022, and smaller deficits for the two years after that.

All told, the province’s tax-supported debt is likely to reach $102 billion or 172% of operating revenue by next March, rising to 195% by 2024, the rating company said.

Those numbers mean that B.C.’s key fiscal and debt metrics are no longer comparable with AAA-rated peers, S&P analysts said. Before the pandemic, debt was about 123% of revenue.