Double blow as S&P and Moody’s downgrade B.C.’s credit rating again, citing deficit

By Canadian Press on April 2, 2025.

VICTORIA — Credit rating agencies S&P and Moody’s have both downgraded British Columbia’s rating on the same day, citing the province’s ballooning deficit.

S&P Global Ratings cut the province’s long-term issuer credit rating to A+ from AA-, while Moody’s Ratings has downgraded its key baseline assessment to aa2 from aa1.

Moody’s says its downgrade reflects a “structural deterioration in British Columbia’s credit profile” and it’s predicting this year’s deficit will soar to $14.3 billion.

That’s more than 31 per cent higher than the forecast in Finance Minister Brenda Bailey’s budget last month.

Moody’s says its credit outlook for B.C. remains negative with no “clear visibility” on how the province will balance its finances.

S&P says there’s a “fiscal mismatch” in the government’s operations, blaming its fourth downgrade in four years on “considerable” deficits and rapid debt accumulation continuing through to the 2028 fiscal year.

S&P also says there’s a negative outlook for B.C.’s finances, reflecting a one-in-three chance of a further downgrade in the next two years if the province’s “commitment to fiscal consolidation continues to waver.”

Bailey told reporters in the legislature that the government had known there was a “strong likelihood” of the downgrades given the “complex circumstance” posed by the Canada-U. S. trade war.

She said Moody’s noted that B.C.’s economy “remains strong and resilient and diversified.”

Asked about the ratings agencies’ complaint about the lack of a plan to balance B.C.’s books, Bailey said the budget “has us getting started” on that target.

“We’re approaching this work with the very specific goal of protecting core services for British Columbians,” she said.

Bailey’s budget had forecast a record deficit of $10.9 billion this fiscal year, while the end of B.C.’s consumer carbon tax on Tuesday is poised see the deficit continue to grow, something noted by Moody’s.

S&P also cut B.C.’s short-term rating to A-1 from A-1+, while Moody’s downgraded its long-term issuer and senior unsecured debt ratings to Aa1 from Aaa.

This report by The Canadian Press was first published April 2, 2025.

The Canadian Press