Canada's Sovereign Credit Rating Analysis

This technical report examines the current sovereign credit rating of Canada and the implications of recent fiscal policies on its creditworthiness. It outlines the ratings assigned by major credit rating agencies, including Standard & Poor’s, Moody’s, and Fitch, which currently rate Canada’s debt as AAA, Aaa, and AA+, respectively. The report discusses the impact of increased government borrowing due to new spending measures and tax cuts announced after the 2025 federal election. It details the methodologies used by these agencies to assess credit ratings, emphasizing the importance of various economic indicators such as gross and net general government debt relative to GDP. The report also highlights that Canada’s credit rating remains strong compared to its peers, despite potential risks associated with rising defense spending and overall public borrowing. The analysis concludes that, in the near term, the anticipated increase in borrowing is unlikely to adversely affect Canada’s top-tier credit rating.