Breathing easy: COVID-19 fails to smother Sault's credit rating

Coronavirus has so far not choked the Sault's credit rating, city councillors will learn Monday night.

Shelley Schell, the city's chief financial officer and treasurer, will report that S&P Global Ratings is maintaining the City of Sault Ste. Marie's credit score at AA (stable).

"Operating performance is largely unscathed by the pandemic, in part due to management action," S&P states in its latest update.

"To mitigate the revenue impact of COVID-19, which we expect will be temporary and largely related to rate- and fee-based revenues, management has implemented cost-cutting measures," the credit analyst says.

"This, coupled with provincial relief funding, will likely be sufficient to cover the year-end shortfall, allowing for more room to proceed with planned initiatives and reduce future budget pressures. On average, we expect operating balances will remain strong at almost 13 per cent of operating revenues."

"We expect the impact of the pandemic on Sault Ste. Marie will be short-lived, as the city's exposure to the coronavirus has been limited. Although activity is rebounding, we expect pre-pandemic economic pressures will remain. In particular, Sault Ste. Marie's challenging demographic profile limits the city's growth prospects and might affect its revenue-generating capability, in our view."

"We continue to monitor the success of the Rural and Northern Immigration Pilot program, a federal government project to help smaller rural and northern communities attract and retain foreign skilled workers to meet their economic development and labour market needs that kicked off late last year," the S&P report says.

"Sault Ste. Marie is the third-largest city in Northern Ontario, relying mainly on steel manufacturing and forestry. Although the city continues to gradually diversify away from its traditional resource-based economy, we believe that medium-term economic and related GDP [gross domestic product] growth will remain muted relative to that of Canada. While GDP per capita is not available, we estimate it to be somewhat below the national level of about US$42,000 based on the city's income levels."

Monday night's City Council meeting will be livestreamed on SooToday starting at 4:30 p.m.