Gross long-term debt issuance by Canada’s three tiers of government is expected to decline slightly in 2007, according to a report published today by Standard & Poor’s Ratings Services.

The commentary, “Outlook For Canadian Government Issuance: Gross Borrowing To Ease In 2007” notes that the federal, provincial, and municipal governments are expected to issue approximately $75 billion in long-term market debt in 2007 (that is, debt with an original maturity of greater than one year), down modestly from last year.

Federal government gross long-term market borrowing is projected to total $28 billion this year, $3 billion less than the estimated issuance level in 2006.

“As a result of its healthy budgetary position, the federal government’s debt retirement has equaled or outstripped new issuance in each year since 1997, with the consequence that overall indebtedness outstanding generally has been on a decline,” said Standard & Poor’s credit analyst Valerie Blair.

Estimates of gross long-term borrowing needs of the provinces and municipalities suggest that 2007 issuance could total about $46 billion, approximately on par with the 2006 level. Ontario and Quebec likely will dominate provincial borrowing this year. In particular, there will probably be increased borrowing by several provincial Crown electric utilities.

Increased federal and provincial transfers, primarily through the federal government infrastructure program and provincial gas tax sharing, have helped to limit the rise in new municipal issuance despite some pressure on capital programs. However, in the years ahead, municipal borrowing is likely to be stepped up to address an array of infrastructure deficiencies in areas such as water and wastewater treatment and transit.