What happened to Christy's "Debt Free BC?"

[flamingfingers]

Sounds like another plank in the ChristyLiberal's election platform has collapsed:

Luster of B.C. bonds dulls under weight of provincial debt

B.C. is flirting with a downgrade of its credit rating with Moody’s Investor Service because it hasn’t done enough to curb its ballooning debt

By Christopher Donville and Cecile Gutscher, Bloomberg November 17, 2014


Bond traders in North America’s financial markets are adding to the pressure on the B.C. government to pare back debt to maintain its top-level credit rating with Moody’s Investor Service.

The premium that traders are giving to B.C.’s bonds in secondary trading, rated “Aaa” by Moody’s, has shrunk to the lowest level since January against Ontario’s bonds, which are rated two notches lower at Aa2, according to an investigation by Bloomberg.

Traders refer to the measure as yield, with a higher yield implying that there is more risk of default on the debt.
Those yields on B.C. bonds imply a rating one level lower than the province’s actual Aaa ranking, according to Moody’s Analytics, which is separate from the credit-rating division.

Trading activity indicates the secondary market is beginning to heed Moody’s warnings about a potential downgrade of B.C.’s debt.

The news stokes the debate over whether B.C. is doing enough to curb its debt, or whether it is worrying too much about borrowing more at a time of historically low interest rates.

“B.C. hasn’t moved to rein in the debt as far as people were expecting,” argued Malcolm Jones, who manages $500 million of fixed income investments, including B.C. bonds, at Adroit Asset Management in Edmonton.

Moody’s reduced its outlook on B.C.’s bonds to negative from stable in late 2012, and last week reiterated that the province isn’t making enough headway in taming its debt to rule out a downgrade.

In the year ending in March, Moody’s forecasts the province’s taxpayer-supported debt will rise to $41.7 billion, or 93.1 per cent of projected revenue, up from about 80 per cent in March 2012.

“The debt burden is starting to stabilize, but we don’t necessarily see a trend where it’s going to start to decrease,” said Michael Yake, a Toronto-based analyst at Moody’s Canada.

A downgrade would be a potential setback for Premier Christy Clark’s vow to keep the government’s books balanced. While the province is on track for a second-consecutive budget surplus in March, forecast in September at $266 million, a lower credit rating could raise borrowing costs, undermining future surpluses.

“We are the first to acknowledge the importance of keeping debt affordable,” said Finance Minister Mike de Jong.
De Jong, just back from an investor trip to Hong Kong, wasn’t available for an interview Monday, but in a statement said B.C. is taking steps to reduce its debt, and bringing it down in real terms “remains a key goal.”

The government’s forecast is for debt to decline to 18.1 per cent of GDP from 18.2 per cent last year.

“This goal is also balanced, however, by the need to continue making investments in priority programs and keeping our taxes competitive,” de Jong added.

On Nov. 7, Clark said she is “not interested in imperilling our credit rating,” in rejecting a call from business leaders to take advantage of low interest rates and borrow more money for needed infrastructure.

However, Jock Finlayson, executive vice-president of the Business Council of B.C., on Monday reiterated his group’s position that building more infrastructure now still make sense.

“I’m not suggesting going out and borrowing another $3 billion on top of where we already are,” Finlayson said, but it is also counterintuitive to cut back on capital spending at a time of weak growth in the economy, corresponding with “the lowest borrowing costs in recorded human history.”

And he added that the advantage of preserving B.C.’s credit rating now could be washed out by the overall rise in interest rates that are expected to double on high-quality government bonds, in nominal terms from 2.5 per cent to five per cent, over the next several years.

“If you need to build a Pattullo Bridge, or St. Paul’s Hospital needs to be rebuilt, there’s an argument for advancing some of those capital projects,” Finlayson said.

[email protected]
Twitter.com/derrickp

Read more: http://www.vancouversun.com/business/ec ... z3Jjs7Vfqe

[LTD]

im willing to bet that Christy has no debt what so ever therefore she has succeeded in her eyes lol

[maryjane48]

its in the toilet i suspect

[bob vernon]

To quote Mike Dejong in last spring's economic update: "Public debt in BC increased by $4 billion last year...... but the budget is balanced." How can this be?

It's because the BC Liberals don't include any debt rung up by BC Hydro, BC Ferries, BC Building Corporation, or ICBC. In fact, these crown corporations can even borrow money and just give it to Christy to spend. That's how we increased public debt by $4 billion and we still have a balanced budge. The budget is NOT balanced.

[flamingfingers]

^^“If you tell a lie big enough and keep repeating it, people will eventually come to believe it."

[Smurf]

Flamingfingers wrote:

^^“If you tell a lie big enough and keep repeating it, people will eventually come to believe it."

I believe it should read:

^^“If you tell a lie big enough and keep repeating it, mindless followers will eventually come to believe it."

[hobbyguy]

"Debt Free" and "Balanced Budget" are two entirely different things.

Hypothetical:

Earn $4,000/month after taxes.

Mortgage: $150,000. Payments: $1,000/month. Normal living costs: $2,000/month.

Budget surplus: $1,000/month.

Bought new car. New debt after trade-in: $15,000 Payments: $500/month

Budget surplus: $500/month

Debt load: $165,000 - up 10%.

Government finances are, of course, much more complex. The question of "good" and "bad" types of debt also creeps into the picture.

Absolute chicanery is when "debt" is increased to cover budget shortfalls, and then saying that the budget is balanced...

I think we can all agree that the election promises surrounding a "debt free" BC were just smoke and mirrors. I knew that then, and figure most people knew it too, just figured it was something nice to vote for...

[Captain Awesome]

"Public debt in BC increased by $4 billion last year...... but the budget is balanced." How can this be?

If government is able to make payments on the debt, budget is considered balanced.

[bob vernon]

Clarkenomics.

The campaign to change the name of Westside Road to Christie Clarke Way should be renewed. After all, they're both crooked.

[Captain Awesome]

Well, I guess it's Cristy Clark's fault that some people don't understand basic accounting terms yet have all the opinions on how to run the province.

[flamingfingers]

Well, I guess it's Cristy Clark's fault that some people don't understand basic accounting terms yet have all the opinions on how to run the province.

If you think for a moment this dingbat is 'running the province' you really don't have much of a clue. Christy Clark 'running this province into the ground with the help of Gwynne Morgan and a whole bunch of other business friends' is more like it.

She cares not one whit about the vast unwashed (us taxpayers) and only wants to keep her uneven fingers on the reins of power. Arrogance and power coupled with an egocentric personality tends to show her lies with her blatherings about 'Families First'' "Trillions of Dollars', 'Prosperity fund', and all the rest of her BS!

[GEW]

Perhaps if all the tree huggers would step aside and allow some rescource projects to be built, the province could achieve at least a lower debt. But all we hear is no LNG, no site C, no Ajax, no logging, no pipelines, etc.
But Jim, the windbag, Sinclair thinks we need a $15 an hour minimum wage. I guess the NDP has a magic money tree somewhere they aren't telling us about.
If I was premier of BC, I would lower our debt by kicking all the freeloaders and hippies out of the province.

[LoneWolf_53]

I guess the NDP has a magic money tree somewhere they aren't telling us about.

They've had that puppy for at least 40yrs that I've been listening to their nonsense.

I'd almost like them to get into power just to see them fall flat on all their pipe dreams, just to see how a certain Christy obsessed hater would spin it into a positive tale. LOL

[Rwede]

^^“If you tell a lie big enough and keep repeating it, people will eventually come to believe it."

You mean just like you believed Dix and VanderScalm about the HST?

Yes, you're right, you did believe the lie they told you over and over again. And now your wallet is lighter as a result. Bummer.