Press Release

DBRS Morningstar Confirms the City of Calgary at AA (high) with a Stable Trend

Sub-Sovereign Governments
July 22, 2021

DBRS Limited (DBRS Morningstar) confirmed the Issuer Rating and Long-Term Debt rating of the City of Calgary (Calgary or the City) at AA (high) and its Commercial Paper (CP) rating at R-1 (high). All trends are Stable. The ratings are supported by the City’s approach to fiscal management, its relatively low debt burden, and its robust liquidity. However, Calgary's credit profile is vulnerable to volatility in the global energy markets. The Stable trends reflect DBRS Morningstar's view that the City is able to prudently manage any temporary and short-term operating pressures, a view that is further supported by provincial legislation, which requires any budgetary shortfall to be recovered in subsequent years.

In 2020, Calgary reported a post-capital expenditure surplus of $342.2 million, down from $525.1 million in the prior year. The 2020 operating results include $187.5 million in nonrecurring operating funding support provided by senior governments. Following midcycle budget adjustments, the City is forecasting a balanced budget, with spending of $4.2 billion, largely unchanged from the prior year. Calgary will attempt to offset any revenue loss arising from planned tax cuts and/or slower economic activity, through cost efficiencies within its operations. DBRS Morningstar notes that the City has a track record of effectively implementing reforms and cost reduction initiatives.

Subject to stabilizing oil markets, vaccine efficacy against the Coronavirus Disease (COVID-19) variants, a persistently low level of caseloads, and easing public health restrictions, the economy is expected to gradually recover through the medium term with real GDP growth of 5.8% anticipated in 2021.

The City's debt outlook has improved relative to DBRS Morningstar's previous expectations. At the time of the last review, the City was anticipating debt to increase modestly. The City has revised its debt projections downward and now expects overall debt burden to decline gradually over the medium to longer term. Based on the City's latest forecast, DBRS Morningstar forecasts net tax-supported debt per capita will decline from $730 in 2021 to slightly below $600 by 2025 (assuming 1% annual population growth). Net tax-supported debt will likely remain stable around 0.3% of taxable assessment over the medium term, assuming no increase in taxable assessment.

A positive rating action is highly unlikely in the current environment, although the City's credit profile may improve somewhat if debt continues to fall over the medium to longer term. A downgrade could arise from a sustained deterioration in the fiscal outlook, or material acceleration in debt growth contrary to current expectations.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at

All figures are in Canadian dollars unless otherwise noted.

The principal methodology is Rating Canadian Municipal Governments (May 3, 2021;, which can be found on under Methodologies & Criteria. Other applicable methodologies include the DBRS Morningstar Criteria: Commercial Paper Liquidity Support for Nonbank Issuers (March 9, 2021) and the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (February 3, 2021;

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release:

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at [email protected].

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.

DBRS Morningstar will publish a full report shortly that will provide additional analytical detail on this rating action. If you are interested in receiving this report, contact us at [email protected].

For more information on this credit or on this industry, visit or contact us at [email protected].

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