The outlook on Ontario’s debt rating was lowered today to negative from stable by Moody’s Investors Service, citing a “greater challenge to return to balance” following weak growth and “higher than previously anticipated deficits projected in the next two years.”
Ontario’s rating could be downgraded if medium-term debt affordability were to deteriorate due to higher-than-expected increases in debt levels or a significant rise in interest rates, Moody’s said.
“The expected path to balance and stabilization of the debt burden, in our opinion, faces greater challenges than before,” said Michael Yake, vice president with Moody’s Canada in Toronto, in a statement.
The announcement comes the same day Premier Kathleen Wynne’s Liberal government, which won re-election June 12, opened a session at the provincial legislature. During the campaign, Wynne pledged to re-introduce her fiscal plan that Moody’s had earlier described as “credit negative.”
Ontario is rated Aa2 by Moody’s and a step lower at AA- by Standard & Poor’s, which also has a negative outlook.