An oil pump jack pumps oil in a field near Calgary, in this file photo.TODD KOROL/Reuters
A second credit-rating agency has weighed in on Alberta's debt, lowering its rating outlook to negative from stable due to the collapse in oil prices and the province's mounting budget worries.
Moody's Investors Service said it affirmed Alberta's credit at triple-A, but it said the future looks riskier as world crude prices hover below $29 (U.S.) a barrel, heaping financial pressure on an energy industry that has been a major contributor to government revenues.
It is a less drastic step than a downgrade, which Standard & Poor's did last month, lowering Alberta's rating one notch after years of enjoying the safest category of public debt.
"While Alberta has entered the downturn in oil prices from a strong financial position, including substantial levels of cash and investments, low debt and low debt service levels, the decrease in oil prices could lead to a rapid fiscal deterioration that erodes these key supports to the triple-A rating," Moody's vice-president Michael Yake said in a statement.
The debt assessments come after the energy sector has shed more than 41,000 jobs and slashed billions of dollars in spending to cope with the oil shock. The Bank of Canada has predicted industry spending could be cut by 20 per cent this year, after a 40-per-cent reduction in 2015.
It has taken its toll on public coffers. The NDP government of Premier Rachel Notley has projected a deficit for the current fiscal year of $6.1-billion (Canadian). It has also warned of a $47.4-billion debt load by the end of the decade as it implements a plan to create jobs through infrastructure spending.
The ratings action also affects Alberta Capital Finance Authority and ATB Financial, the government-owned bank.
Jeffrey Jones