Fitch gives Northwest Territories ‘very high’ AA- rating

Ratings agency Fitch on Tuesday assigned an AA- rating to the Government of the Northwest Territories, saying federal backing afforded financial stability but the debt burden was creeping higher.

Fitch’s assessments help investors decide whether companies or governments are able to manage their debt appropriately and how likely it is that they might default on debts in the foreseeable future.

AA- is the fourth-highest on a scale of around 20 possible ratings. Fitch calls the AA category a “very high” credit rating with “very strong capacity for payment of financial commitments.”


The territorial government, which on Tuesday publicized the rating as an endorsement of its approach, said the rating was the same as that given to Ontario, Quebec, and Alberta, but below Saskatchewan (AA) and British Columbia (AA+).

“The Fitch AA- rating is a signal that the GNWT continues to manage its financial affairs in a responsible manner and gives the GNWT stronger scores for revenue stability, prudent fiscal management, and debt,” the territory said in a news release.

The rating was published by Fitch at the NWT government’s request after the territory sold bonds worth $180 million in 2020, the first time the territory had taken such an action. (Bonds allow investors to loan the territory money, which is then paid back with interest over time.)

According to the territorial government, it received feedback during that bond sale that having only one rating from a major agency – Moody’s, which issued an Aa1 rating in July 2020 – was not enough.

“Financial lenders recommended that the GNWT seek a second rating, so the GNWT acquired the services of Fitch Ratings Inc through a request for proposal process,” the territory said.


Summarizing its rating, Fitch said the NWT’s “history of careful financial management and the stability of federal transfers” – the annual payments per NWT resident provided by Ottawa – made the territorial government a lower-risk investment.

Fitch said most of the challenges facing the territory are similar to those faced by other governments, but noted the NWT’s “debt sustainability looking ahead through fiscal 2025-2026 deteriorates [given its] operating needs and a sizeable capital program.”

Whether the AA- rating is maintained depends on the territory’s pandemic response, Fitch said, pointing to the NWT’s limited population growth, the likelihood that diamond mining will soon “decline rapidly as an economic driver,” and the time probably required to rebuild tourism post-pandemic.


A “slower economic recovery without offsetting policy responses” would mean a rating downgrade, Fitch concluded, while lower-than-forecast borrowing in the years ahead could see the rating improve.