Despite elevated trade policy uncertainty, the sovereign credit ratings for the five provinces rated by Fitch Ratings — Alberta, British Columbia, Ontario, Quebec and Saskatchewan — all remain at ‘AA’, the rating agency said.
In a new report, Fitch said that its long-term issuer default ratings for the provinces all remain in the AA category, despite diverging trajectories for their debt burdens.
“Across Canada, trade uncertainty is weighing on growth, investment and affected export sectors, while projected debt trajectories are becoming more differentiated,” the report said.
For instance, B.C.’s debt is expected to “rise materially” in the near term, it said.
Earlier this year, Fitch downgraded B.C.’s rating from AA+ to AA- with a negative outlook — a move that, it said, was driven by its expectations of “meaningful debt-metric erosion from projected operating deficits and capital spending.”
The outlooks for the other four provinces are stable, with Ontario and Quebec remaining the most indebted provinces, while Alberta and Saskatchewan have the lowest debt burdens.
However, Fitch said that the risk profiles of Alberta and Saskatchewan are considered “high mid-range”, which is weaker than the stronger profiles for B.C., Ontario and Quebec.