Photo: Jean Balthazard Le Devoir Le ministre des Finances du Québec, Eric Girard
Investors were not shaken by the warnings issued by a series of credit agencies the day after the budget, believes Finance Minister Eric Girard. However, it is too early to conclude that they will remain confident, replies a former Bank of Canada economist.
More than $576 million was borrowed on Wednesday during the first bond issue since the tabling of the 2024-2025 Quebec budget by Quebec's big financier. This is the largest total obtained on the Canadian market since July 2023. The rate of return offered to investors fell to 4.1%.
“The show was well received, it sold out. The investors were there,” Mr. Girard said on Thursday. The day before — the day of this broadcast — several credit agencies had sounded alarm signals regarding the deficits announced for the next five years in the budget.
“The drop in budgetary results is a negative credit finding which highlights the pressures that the Quebec government is facing both on revenues and on expenditures,” wrote the Moody's firm on Wednesday, for example. , in a report obtained by La Presse. The agency is not currently reviewing its credit rating for Quebec, currently set at “Aa2 stable”.
Despite this analysis from Moody's, which is partly shared by the firm DBRS Morningstar, Eric Girard assures that the bond sales went well. “Investors have taken note of these ratings from the rating agencies,” he noted. But independent economist Jean-Pierre Aubry, who worked for 30 years at the Bank of Canada, believes it's too early to judge. In a bond issue held on Thursday, the yield rose to 4.2%, up slightly from the day before.
“We are waiting to take positions that could change. Wait and see, as they say,” Mr. Aubry said in an interview.
“It’s rarely just an event. The fact that the rating agencies have raised a flag will make them look even more. [François] Legault and his gang, they will have to regain their credibility,” he added. According to Mr. Aubry, this was tainted by the lack of predictability in recent financial years. While Quebec predicted a deficit of $3 billion in 2024-2025 in its November economic update, this ultimately amounted to $11 billion.
In the press scrum on Thursday morning, the finance spokesperson for the Liberal Party of Quebec, Frédéric Beauchemin, for his part invited Minister Girard to listen to the “yellow lights” of the agencies. credit. “In the bond world, after the budget, Quebec’s relative borrowing cost increased,” he said. It’s important that the [Coalition Avenir Québec] gets its act together, it’s for all Quebecers: today, it’s going to cost more to borrow. »