Biting their nails in the key producing provinces
Lower crude prices have some businesses biting their nails in the key producing provinces of Alberta and Saskatchewan, but a new report suggests citizens who rely on oil fortunes to fund government programs shouldn’t worry.
Credit watchdog Moody’s says both provinces have low debt and the financial cushion required to sit through a long period of low oil prices without threat of losing their high grades that are the envy of other provinces. Both provinces carry Moody’s highest Aaa rating, with stable outlooks.
“Their enhanced creditworthiness reflects their substantial financial reserves, low debt levels and fiscal strength, which provide flexibility to cope with external shocks,” says the report.
“Alberta and Saskatchewan both have financial assets that far exceed the median of Canadian provinces.”
In fact, Moody’s says Alberta’s financial assets are more than three times higher than its debt, covering two-thirds of its annual consolidated expenditures.
“[This will] provide a substantial buffer should there be a protracted decline in oil prices”, states Moody’s analyst Kathrin Heitmann.