Aug. 24 (Bloomberg) -- New Brunswick had its debt rating cut by one level to Aa2 by Moody’s Investors Service Ltd. because the Canadian province will record a “sizable” increase in its borrowing over four years, the rating company said.

The downgrade will affect about C$11.2 billion ($10.4 billion) of the province’s debt, Moody’s said in a statement today. The rating company also said the province’s rating outlook is stable.

The province’s financing requirements will rise to C$1.2 billion in the 2010 fiscal year and C$1.4 billion in 2011, Moody’s said. This will increase its debt-to-revenue ratio to 150 percent after a four-year fiscal plan is implemented, compared with 106 percent in 2009. The province, home to about 747,000 residents, will record deficits equivalent to 10 percent of its revenue over the next four years.

The credit downgrade was the first action by Moody’s since it boosted New Brunswick’s grade to the second-highest rating of Aa1 in November 2006, up two levels from the previous Aa3.

A phone call to the province’s Finance Department requesting comment was not immediately returned.

To contact the reporter on this story: Alexandre Deslongchamps in Ottawa at adeslongcham@bloomberg.net.

Last Updated: August 24, 2009 14:51 EDT