DBRS Maintains Its Rating of the City of Vancouver Under Review with Negative Implications

DBRS has today maintained its rating of the City of Vancouver (the City or Vancouver) Under Review with Negative Implications. This action follows the decision by the Legislative Assembly of British Columbia on January 18, 2009, to grant the City unlimited borrowing authority for needs relating to the Vancouver Olympic Village under Bill 47.

DBRS originally placed the City’s Long-Term Debt AA (high) rating Under Review with Negative Implications on January 14, 2009, following the announcement by Vancouver that it would be seeking an amendment to the Vancouver Charter to allow the City to undertake borrowing without approval of the electorate. DBRS estimated the City could potentially require a total of between $450 million and $875 million in financing for the Olympic Village project to cover the cost of (1) the $750 million loan that was to be provided by Fortress Investment Group, of which $317 million has been provided to date, and (2) the forecast value of $125 million relating to cost overruns.

DBRS’s decision to maintain the rating Under Review with Negative Implications results from the unlimited borrowing authority and the uncertainty surrounding the extent of the City’s undertaking. DBRS believes that a sizable increase in debt would result in a material deterioration of key municipal credit metrics that could push the City’s credit risk profile down to the AA level. DBRS will resolve the Under Review with Negative Implications status over the near term, once it has a clearer understanding of the ultimate size of additional indebtedness to be assumed.

Note:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Canadian Municipal Governments, which can be found on our website under Methodologies.

This is a Corporate (Public Finance) rating.

This rating is based on public information.