Tbnewswatch Local News
Sunday July 5 2015
12:25 AM EDT
2014-06-19 at 10:29

City maintains AA- credit rating

By Leith Dunick, tbnewswatch.com

THUNDER BAY -- Carol Pollard said the city’s moderate debt level is likely the reason the city has maintained its credit rating.

Standard and Poor’s on Thursday reaffirmed Thunder Bay’s AA- rating, which Pollard, the city’s general manager of finance called “really good news.”

“That’s a very good credit rating and it signals to investors that we are able to pay our debt,” said Pollard, also the city treasurer.

“It results in good news for our ratepayers, in that a good credit rating means that you borrow interest at a lower rate and are able to pass on those savings to the ratepayers of the community.”

It’s the second straight year Thunder Bay has held an AA- rating

From 1998 to 2011, the city’s rating was A+ (stable). In 2012 it improved to A+, with a positive outlook, and last year to the current AA- (stable).

“That’s a huge jump,” Pollard said. “It’s a lot of work to get to get from one level to the next. Reaffirming is what we were hoping and anticipating for this year.”

Pollard added there are a number of reasons why the rating has jumped twice in the past three years.
First and foremost is the city’s level of debt, which remains moderate compared to other Canadian municipalities.

The debt, expected to hit $184 million by year’s end, is more than manageable, Pollard said.

“We have good budgetary performance and very good liquidity,” she added.

“The other point that they address is we are taking steps to address the infrastructure deficit.”
Through the Enhanced Infrastructure Renewal Fund, Thunder Bay is spending close to $40 million annually to close the infrastructure gap.

In reality, the city’s finances are in good shape, Pollard said.

“Our debt, as a percentage of assets, is about 17 to 18 per cent. Compare that to a household and your mortgage on your house is often more than that.”

After-capital deficits of less than 10 per cent of total revenues are projected for the next two years.

The rating company, in its report to the city, called Thunder Bay’s economic base stable, with more than 20 per cent of its workforce employed in the public sector. But the economy is also diversifying, with jobs created in biomedicine, health care and research.

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Tiredofit says:
Quote: “Our debt, as a percentage of assets, is about 17 to 18 per cent. Compare that to a household and your mortgage on your house is often more than that.”

Perhaps if our property taxes where more manageable we would be on par with the city, however based on spending sprees, that's not likely going to happen for the homeowner now is it!

Just say'n
6/23/2014 8:12:09 PM
Pandora says:
A rating by Standards and Poor is not necessarily worth the paper it is written on.
Remember 2008 S&P were giving Fanny Mae good ratings then too, just prior to the crash in the US.
6/20/2014 3:36:42 PM
signman says:
What is more important to taxpayers is the fact:


(taxes compared to propery values)

Our debt is going up this year by $15 million dollars. Remember Golf Links road is being debentured and the repairs to Boulevard dam are put off for another year. The city's infrasture is crumbling and the roads are as bad as those in Detroit!

Did you hear about the car that hit a pot hole on Golf Links road and is now a COMPLETE RIGHT OFF! ($6,000 dollars) The air bags went off as the front wheel fell into this huge hole right across from Thunder Bay Country Club on the newly paved Golf Links road. You can see the spot that has since been repaired.

Dease pool is over 100 years old. How come there is no money to build a new pool for the kids?

And we lost Municpal Golf Course after 80 years!

These are the real facts and the real story in Thunder Bay, NOT THE CREDIT RATING.

6/20/2014 10:55:38 AM
smartguy83 says:
Thank goodness we have a Council dedicated to improving these issues, unlike previous councils who refused to spend.

As for the Roads where is your source? Last I heard TBay has remained off the "worst ROAD in Canada" list again so that must mean something.

The story about the car = half true. Not to mention it is the construction companies problem not the cities.

Municipal golf course was a "beginners course" at best and was in terrible condition. They made an excellent decision to get rid of it as there are many similar courses in the city.

Finally, the waterfront is not a fiasco. People keep saying this but there are 100's of people there on nice days enjoying it. People really need to accept that the waterfront is worth checking out and enjoying.
6/20/2014 2:49:22 PM
Me n My Opinion says:

(taxes compared to propery values)"

He's probably right, but the tax rate is only high because our property values are low in comparison to other municipalities. The only number that matters with respect to taxes is the size of the cheque we have to write each year. When you compare that to all the other cities in Ontario, we're actually a little below the average. Who gives a rat's bottom what the tax RATE is, just the size of the cheque.

I believe Dease Pool was included in their long term capital renewal plan last year, and why is the city in the golf business at all? Muni was a good start, now get rid of the other two and start realizing some actual savings.
6/20/2014 3:59:22 PM
moi says:

Why aren't comments for the "OSPCA could bring low cost.." article being allowed?
It's long overdue, and a most welcome service.I give it a big thumbs up!
6/19/2014 5:37:04 PM
fastball says:
A credit rating of AA- is excellent for a city in today's economy...and contrary to the dire predictions of the armchair accountants here, TBay is doing just fine.
But then again, admitting that Hobbs and Council are doing ANYTHING resembling a decent job is obviously too big of a pill to swallow for the aforementioned amateur financial experts.
"Why isn't it AAA...?" Give me a break. Man, you must have been a tough parent to impress at report card time.
6/19/2014 2:24:15 PM
Eastender says:
Anybody who runs a household, and tries to live within a budget, while staying out of debt, is a far superior financial expert than Hobbs, or Commisso.
Its not rocket science, contrary to what you would have every one believe, all you have to do is be able to add, and subtract. Here's the really simple part-Dont spend more than you earn. But then, Hobbs and Commisso don't really care, because they aren't spending their money, they're spending yours and mine.
6/20/2014 11:01:26 PM
joey joe joe jr. shabadoo says:

The general meaning of our credit rating opinions is summarized below.
‘AAA’—Extremely strong capacity to meet financial commitments. Highest Rating.
‘AA’—Very strong capacity to meet financial commitments.
‘A’—Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.
‘BBB’—Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
‘BBB-‘—Considered lowest investment grade by market participants.
‘BB+’—Considered highest speculative grade by market participants.
‘BB’—Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.
‘B’—More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.
‘CCC’—Currently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.
‘CC’—Currently h
6/19/2014 11:47:55 AM
CRay says:
aa minus is not very good. also what has it been historically? when did it begin to drop and what coincided with those times?

also a credit rating just shows the ability to pay back borrowed money. That in turn means this city just has the ability to tax its citizens to pay their bills. this does not show proper financial management as much as the city likes to pretend it does.

why is it not AAA? where is the problem areas and are they being addressed?
6/19/2014 11:12:13 AM
advocate says:
A few years ago it dropped, because the foresty sector took a hit and we relied heavily on it. Thus, while there were debt, there was a greater concern that we did not have the economy to pay for the debt.

The rating improved last year through diversification of the economy.
6/19/2014 12:06:38 PM
buzz says:
AA- is actually a great credit rating. A quick check of the major municipalities in Canada reveals most are somewhere in AA. No municipality in Canada is AAA only Alberta and the Government of Canada have that rating. Toronto which has a much more diverse economy is AA+. For a city this size this is a great rating. As despite what people think it shows that the Cities use of debt is prudent, affordable and manageable. Our debt service ratio is very low at around 6-7%, and our City has mandated a very low cap on debt service at 10%, far lower than what the municipal act allows. To put in in perspective as an individual you can get a mortgage with a 40% debt service ratio. Overall AA- is extremely good.
6/19/2014 12:48:58 PM
notorious says:
Well, wonder what the Thunder Bay development interlopers have to say about this one?
6/19/2014 11:09:40 AM
smartguy83 says:
ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ to all those who seem to think they know more than others about finances.

The city is OK. Accept it.
6/19/2014 10:59:11 AM
Eastender says:
An excellent credit rating does not mean you should get into debt up to your ears and tie yourself up so tight financially that you have absolutely no wiggle room. Banks dont care that you will have to raise your taxes and burden your citizens financially. All they care about is that you have the ability to raise taxes and pay the interest rates.
So dont be overjoyed that we have a decent credit rating, it doesnt mean what you think it does. Unless your a fool with money.
6/19/2014 1:47:39 PM
advocate says:
Except if you do those activities, you will damage the economy, which means that you will have a weaker ability to pay the debt. Thus, it reduces your credit score.
6/19/2014 1:54:32 PM
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