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November 29, 2001
For immediate release

Province's Credit Rating Revised to an "A" by Standard & Poor's

Provincial Treasury

Today, Provincial Treasurer Pat Mella tabled in the Legislature a statement announcing Standard & Poor's ‘Single A' long-term credit rating for the Province of Prince Edward Island. The revised credit rating now provides the Province with three long-term credit ratings in the ‘A' category. Minister Mella said, "This is the first time since the late 1980s that three independent bond raters have all assigned ‘A' credit ratings." Previously, the Province's rating was ‘Triple BBB+.'

The latest credit rating is positive news for the Province. Credit ratings are considered to be an important investment tool used by investors. The importance of the ‘A' rating impacts directly on the interest rate the Province would pay on any new debt issuance.

Minister Mella said, "The revised credit rating by Standard & Poor's reflects PEI's low and stable debt-to-GDP ratio, which compares quite favourably with many other Canadian Provinces." Using Standard & Poor's approach, provincial debt was approximately 24 per cent of GDP at the end of fiscal year 2001. The Provincial Treasurer continued to say, "Standard & Poor's assessment included PEI's good budgetary performances in past years and the commitment to balanced budgets in future years, despite a deficit this year. The good performance of the economy on a trend basis in the past five years reflects solid gains in manufacturing, exports and incomes."

Although there is near-term uncertainty on the economic front, Standard & Poor's expects the Provincial Government will undertake the necessary remedial measures allowing it to remain on track with its stated objective of maintaining fiscal balance. Despite the slower growth, the Province has a good track record of managing its expenditures. Spending as a share of GDP fell slightly to 27 per cent from 28 per cent between fiscal 1997 and fiscal 2001. Debt interest charges declined to 11 per cent of total revenue in fiscal 2001 from about 13 per cent in fiscal 1997. The Province's debt also showed marked improvement during the same period, falling to 24 per cent of GDP in fiscal 2001 from 27 per cent in fiscal 1997.

The Minister noted that Standard and Poor's and the Canadian Bond Rating Service have combined their operations in Canada.

Media Contact: Doug Clow
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