SASKATOON — US rating agency S&P Global Ratings has reaffirmed the City’s credit rating as the highest rating possible, a ‘AAA’ credit rating with a “Stable” outlook.
The City has maintained the ‘AAA’/Stable credit rating for 20 years since S&P first began affirming the city’s credit ratings in 2002.
“We are very pleased to receive S&P Global Ratings ‘AAA’/Stable credit rating today especially given the financial challenges the City and other municipalities have weathered because of the COVID-19 pandemic. This rating supports the City of Saskatoon’s ongoing strong governance and financial management practices,” said City Chief Financial Officer Clae Hack.
“The City’s prudent financial management and strategies have allowed us to continue providing essential core services while balancing our budgets during the ongoing financial disruption from COVID-19 over the last two years.”
Saskatoon’s diverse economy, strong operating surpluses, and prudent financial management made the release of S&P’s ratings report reaffirm the ‘AAA’ long-term issuer credit and senior unsecured debt ratings of the City with “stable” outlook, according to a City press release.
S&P expects “the global pandemic will continue to affect economic growth in 2022 as social distancing and other preventative measures slow business activity,” but further note they “believe this slowdown will be temporary and (Saskatoon’s) economic diversity and ongoing population growth should continue to support GDP per capita growth in line with Canada's over the forecast horizon.”
“Maintaining the City’s ‘AAA’ rating which includes a stable outlook, is important as it supports our confidence in our budgetary decisions, financial management and overall economic outlook for the City of Saskatoon,” added Hack.
“We are a municipal leader and remain assured in our ability to minimize debt as we commit to priorities within the City’s 2022-2025 Strategic Plan and undertake long-term planning for infrastructure to support our great quality of life in Saskatoon.”
Key rationale within the Jan. 18 S&P Global Ratings Direct Report include:
- The city's “strong and prudent financial management is a key credit strength” and its “management team is experienced and qualified to effectively enact fiscal policies and respond to external risks.”
- The city “demonstrates good political and managerial strength with its lengthy track record of passing budgets with minimal variations from budgeted revenues and expenses.”
- “Management’s disclosure and transparency are good, and the city prepares robust annual budget documents, with multi-year operating and capital budgets and long-term capital and borrowing plans.”
- The city’s “strong budgetary performance will assist in keeping the debt burden manageable.”
- An “exceptional liquidity position will continue to support its creditworthiness.”
Credit ratings are one of several tools that investors and lenders use when making decisions regarding an organization’s future financial strengths and weaknesses. For the City of Saskatoon, the ‘AAA’/Stable rating serves as an indication of the credit risk and ability to meet its financial obligations in full and on time.
This also identifies the credit quality of the City’s debt issue and can translate into lower interest rates for favourable credit ratings since there is minimal or low risk associated with the City’s debt.