Date of Release: 2007-06-01
DBRS has today confirmed the Long-Term Debt rating of the Regional Municipality of Peel (the Region) at AAA with a Stable trend. The solid credit profile remains underpinned by the Region’s track record of sound management, very low debt burden and considerable liquidity position. In addition, the regional economy continues to perform reasonably well despite the impact of the strong Canadian dollar and softening U.S. demand on Ontario’s manufacturing sector. The containment of capital expenditures remains challenging and is likely to keep results under pressure. However, no new tax-supported debt is projected over the foreseeable future, a position which should help the Region maintain its solid financial profile.
The operating budget remains balanced in 2007 with the help of continued efficiency improvement, cost control as well as tax and utility rate increases of 3.9% and 9.2%, respectively. However, markedly higher capital spending projected for the year will likely keep the Region in a moderate net deficit position (after capex). The upward trend in capital spending projections is consistent with the new ten-year capital plan that calls for investments totalling $4.4 billion over the 2007–2016 period, an increase of roughly 46% over the previous ten-year plan (2006–2015). Driving capital costs is the solid population growth experienced in the Peel region in recent years as well as growing infrastructure renewal needs and the significant construction cost inflation observed in Ontario and across Canada over the last two to three years. While this widespread trend is making the fiscal management process more challenging, the Region has a track record of prudent project management and plans to continue to rely primarily on development charges and its large reserves to finance the bulk of its capital plan, which should help prevent undue pressure on its balance sheet and property tax rates.
Note:
All figures are in Canadian dollars unless otherwise noted.
The full report providing additional analytical detail is available by clicking on the link below or by contacting us at info@dbrs.com.
| Issuer | Debt Rated | Rating Action | Rating | Trend | Notes | Published |
|---|---|---|---|---|---|---|
| Peel, Regional Municipality of | Long-Term Debt | Confirmed | AAA | Stb | 1 Jun 2007 |
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