City of Ottawa

This report does not constitute a rating action. Overview Credit context and assumptions Base-case expectations A large public sector will support long-term economic growth despite our expectation for slower population and economic growth in the medium term. Increased government grants will support revenue growth but inflationary and employee-related costs will pressure operating balances in the next two years. The City of Ottawa?s prudent financial management practices and robust operating and capital budgets help support its creditworthiness. After-capital deficits will improve as large transit projects are completed and capital spending moderates. We believe the city's relationship with the Province of Ontario will remain extremely predictable and supportive. We expect Ottawa?s liquidity will remain sufficient to meet all its debt service requirements.

...The rating reflects our view that despite slower anticipated population growth, Ottawa's diverse and wealthy economy will support modest economic expansion in the next several years. This in turn will support revenue growth at the city, helping to offset operating expense pressures. This will also largely mitigate the credit impact of continued net borrowing related to the city's large capital plan. In addition, we believe the city will maintain a very high liquidity position through large cash balances and an investment portfolio that has generated healthy returns in recent years....

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