Govt at risk of further credit downgrades....>

CANADA: Govt at risk of further credit downgrades after reporting deficit worth

16% of GDP Wednesday, a postwar record. 

- "The key to avoid further downgrades is stabilizing debt-to-GDP dynamics.

Further commitment to taper expenditure is needed" Carlos Capistran of BofA

Securities says.

- RBC's Craig Wright and Colin Guldimann: "The deterioration in the fiscal

picture puts the federal government at risk of further downgrades, with other

ratings agencies likely following Fitch's lead in bringing Canada down one notch

to AA+. While a downgrade may be likely, Canada is far from alone in this

situation: the OECD projects several other AAA countries will breach the average

indebtedness among peers last year."

- Deficit of CAD343b for 2020-21 was bigger than expectations of ~CAD260b, and

FinMin Morneau said he's prepared to go further. He also laid out no new fiscal

"anchor" or a plan to slim the deficit or debt in the medium term.

- "Markets and rating agencies will pay keen attention to a Fall update that is

expected to lay out longer term projections" Scotiabank's Derek Holt said.