Standard and Poor’s Reaffirms Niagara Region’s “AA” Stable Credit Rating
Niagara Region continues to maintain its “AA” credit rating, with a stable outlook, according to an October 10, 2018 confirmation report released by credit rating agency Standard and Poor’s.
The report indicates that Niagara’s budgetary performance has improved and is expected to continue to benefit from a supportive institutional framework, prudent debt and liquidity management practices and from sound financial management. However, these strengths are mitigated by its limited ability to raise tax revenues because of low household income levels and slow economic and assessment growth compared to similar municipalities.
Long-term plans present a good level of detail and are based on well-documented and realistic assumptions. S&P praises the Region’s disclosure and transparency in the delivery of robust annual operating and capital budget documents which are shared with auditors and residents alike. S&P scored the Region with strong Financial Management, very strong Budgetary Performance, and exceptional Liquidity as well as a very predictable and well-balanced Institutional Framework.
The report notes, “We consider that the management team has adequate expertise in implementing policy changes. We expect no significant turnover at the senior management level in the near term, which we believe lends stability to management practices. Niagara has shown increased focus on long-term strategic and financial planning, which its financial policies support.”
A strong S&P rating enables capital works projects funded by debt, such as the costs of facilities, public works projects, Niagara Regional Police Service, Niagara Regional Housing, to be more cost effective for the Region and the taxpayer as well as our local area municipalities who borrow through us.
Niagara Region prides itself on being a strong partner to local area municipalities and plan to issue “about C$223 million in 2018-2020 on behalf of its lower-tier municipalities as well as to fund part of the region’s capital projects. We expect Niagara’s tax-supported debt, which as per our criteria includes both the region’s debt as well as the on-lent debt to its lower-tier municipalities, to increase to 80% of consolidated operating revenues in 2018 before declining to 76% in 2020”.
Niagara Region’s credit rating will be reassessed again in Fall 2019.