Yesterday Fitch, one of the major credit/bond rating firms, downgraded their rating of Ontario bonds from AA to AA-. From HuffPost,
But really, just about everyone saw this coming. From the same article,
Moody's credit rating agency changed Ontario's debt rating in July to negative from stable, citing concerns about the province's ability to eliminate the deficit as scheduled.
“Governments typically borrow money as a means to finance long-lived assets such as roads, schools or hospitals. In Ontario’s case, the province has gone deeper into debt to pay for day-to-day expenses such as the salaries and pensions of government employees and is passing the bill on to future generations,” ...
The study concludes that the growth in debt is unsustainable and will require a change in fiscal direction including a marked reduction in spending.
“If the Ontario government fails to change course, its unsustainable fiscal policies could provoke further credit rating downgrades, higher borrowing costs and spiralling interest payments,” said Charles Lammam, Fraser Institute associate director of tax and fiscal policy.