Despite the changes and extra costs placed on the City of Hamilton because of the COVID pandemic, The Standard and Poor credit rating agency has maintained Hamilton’s credit rating at AA+/stable. The agency says they maintain confidence because Hamilton has engaged in cost-cutting to meet the epidemic and are receiving support from senior governments.
In its commentary. S&P writes, “Hamilton’s economic diversification will facilitate its recovery, supported by prudent financial management. We believe Hamilton’s economy will contract in 2020 and begin to recover over the next two years as social distancing measures ease. Despite what we view as a temporary shock, we believe Hamilton continues to demonstrate characteristics of a resilient economy, including its economic diversification. Although historically rooted in steel production, the city’s economy has moved into other sectors, including advanced manufacturing, aerospace, agribusinesses, food processing, life sciences, digital media, and goods transport. We estimate that Hamilton’s GDP per capita is approximately in line with that of the national economy at about US$42,000.”
Hamilton’s strong management operates in what we deem to be a very predictable and well-balanced local and regional government framework that has demonstrated a high degree of institutional stability. Although provincial governments mandate a significant portion of municipal spending, they also provide operating fund transfers and impose fiscal restraint through legislative requirements to pass balanced operating budgets.
Hamilton funds its capital requirements, partly through creating operating surpluses that are used to fund capital projects. The remainder of its capital needs are funded through debt. Most households would love to be in Hamilton’s cash position as the report motes “the city’s average free cash and liquid assets are just over C$1 billion and will represent about 15 times debt service. “
The city’s total debt will rise to about $533 Million nest year against revenies of $1.7 Billion.