SASKATOON—Financial information and analytics company S&P Global continued to rank the city with an AAA/Stable Credit rating, citing its small, diverse, and strong population growth as a rationale for its creditworthiness.
According to US-based credit rating agency Fitch, the AAA ratings represent having the lowest expectation of default risk and are assigned to robust capacity for payment of financial commitments. S&P released the global ratings report on Wednesday, Jan. 15.
“We expect the city’s strong financial management, coupled with an extremely predictable and supportive institutional framework, will support the rating,” S&P said in its report, confirming Saskatoon’s strong credit rating.
“Saskatoon’s strong and prudent financial management is a key credit strength, in our view. Although the recent municipal elections resulted in a historic turnover among Council, the city’s administration remains largely stable, with significant experience and a record of effectively enacting fiscal policies.”
S&P added that the city has prudent financial policies and views its management accountability and transparency as strong, as reflected in ongoing disclosures and grounded assumptions.
“[Saskatoon] consistently produces robust annual budget documents. It also prepares multi-year operating and capital budgets alongside comprehensive long-term capital and borrowing plans for upcoming years. This underpins fiscal transparency and discipline in our assessment,” S&P said in its report.
S&P said Saskatoon continues to have a stable outlook, and the rating has been the highest possible for 23 years since the New York City-based corporation began affirming the city’s rating in 2002.
In a statement, City Chief Financial Officer Clae Hack said the Council and administration continue to be fiscally responsible and transparent while focusing on delivering high-quality civic services and programs to residents.
“The endorsement by S&P confirms that we continue to be on the right track. While we are excited to receive the ‘AAA’/Stable credit again, it’s not something we take for granted,” said Hack.
“This rating reaffirms that the city is managing its finances responsibly as we continue to focus on planning appropriately to ensure we can meet the needs of our growing city now and for years to come.”
S&P rates the City of Saskatoon’s institutional framework as “extremely predictable and supportive” and bases credit context on having “effective financial management practices [that] will support strong operating balances.”
The report indicates Saskatoon’s strong budgetary performance will ensure a manageable debt burden amid large capital expenditures, including Link (Bus Rapid Transit), infrastructure maintenance, and firewalls.
With these projects partially funded from the city’s reserves, S&P expects after-capital surpluses averaging 2.8 per cent of revenues during the base-case period.
“[Saskatoon] is moving forward with significant projects, such as Link, that support the needs of a growing city. We are confident in our plans to deliver these projects in a fiscally responsible manner, and S&P’s assessment underpins this,” said Hack.
Credit ratings are one of several tools investors and lenders use when deciding on an organization’s future financial strengths and weaknesses. For the City of Saskatoon, the ‘AAA’/Stable rating indicates the city’s credit risk and ability to meet its financial obligations in full and on time.
