Alberta Considers Debt Buybacks to Smooth Its Issuance

Alberta may consider buying back some of its bonds in an effort to smooth its maturities as its debt outstanding rises, Bloomberg News reported. The buy-back strategy, including terms and amounts, is still under analysis, according to Jerrica Goodwin, an Edmonton-based spokeswoman at Alberta’s finance ministry said. The plan, which may start as soon as the next fiscal year beginning in April, won’t reduce overall debt outstanding but could allow Alberta to spread out maturities over the longer term, she said. Managing the maturity profile is increasingly important for the oil-producing province because net financial debt is poised to rise 69% to C$46.4 billion ($34.9 billion) by the end of March 2023 from last fiscal year, according to government projections. Last week, the province’s credit rating was cut by Moody’s Investors Service to Aa2 -- its third-highest investment grade -- citing concentrated reliance on non-renewable resources, mainly oil, as well as “continued fiscal pressures.” Alberta is seeing increasing borrowing costs compared with Ontario and Quebec, as the decline in oil prices and a pipeline bottleneck hurt corporate profits, putting a drag on its finances. The province last sold long-term debt in the domestic market on Sept. 24 when it added C$1 billion to its 2030 bonds, according to data compiled by Bloomberg. Read more.

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