It’s a Good Thing

A stock is a piece of equity. A bond is a piece of debt.

The “City of Toronto Act” that Miller loves to talk about will be the ultimate brake pedal for council’s free-wheeling spending.

Although the bond rating firms like the revenue generating options of the act, I am not sure they realize how perilously close Toronto is to breaching its compliance. The Act clearly states in the financing sections that Toronto is required to have an AA bond rating with Dominion Moody and S&P in order to borrow money through a variety of means.

In the past several years since Miller has come to power, the credit rating has been downgraded. Toronto did have a triple AAA rating when the budget was being balanced. Simply put, Toronto’s credit rating is at the end of its rope. If the rating is adjusted downward again – at all – the city will no longer, under the terms of the act, legally be able to borrow money.

I must say that this is good news to the weary taxpayer. Indeed it was a very shrewd move to put this check inside the Act.

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