Canada Loses Pristine AAA Credit Rating by Fitch

New York's Fitch downgrades Canada’s credit rating below “AAA” for the first time

Canada Loses Pristine AAA Credit Rating by Fitch

Fitch stripped Canada of its AAA status on Wednesday because of a spike in emergency spending for COVID-19, making it the first top-rated country to be downgraded by the ratings firm during the pandemic.

However, the country's debt "ceiling" was maintained at AAA and its short-term debt was also affirmed, according to Kelli Bissett-Tom, director and primary rating analyst at Fitch.

Canada would run a much expanded general government deficit of 16.1% of GDP in 2020 and emerge from recession with much higher public debt ratios, Fitch said.

"That AAA had been cherished through a lot of hard work and prudence since the 90s", said Michael Goshko, corporate risk manager at Western Union Business Solutions.

Prime Minister Justin Trudeau has defended his government's COVID-19 spending measures after a USA credit ratings firm downgraded Canada.

The Triple-A credit rating, which is the highest possible rating, was something Prime Minister Justin Trudeau's Liberals highlighted in their 2019 election platform and in previous budgets.

Now is the time for Canada to reassess what it should do, having acted so quickly in the face of the pandemic, Wiseman said, though government stimulus should continue. "He's letting you down".

Financial market reaction was muted, with the Canadian dollar slightly extending its decline to 1.3617 to the USA dollar, or 73.44 US cents, while Canada's 10-year yield was little changed at 0.545%.

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