In January, the provincial government updated their Term Debt Issues document, which lists all the term debt they still have outstanding.
I thought I’d summarize the new term debt taken out during 2023.
| # of term debts | Total term debt | |
|---|---|---|
| January | 1 | $0.086 billion |
| September | 2 | $0.850 billion |
| October | 1 | $0.058 billion |
| November | 1 | $0.600 billion |
| December | 1 | $0.086 billion |
| Total | 6 | $1.681 billion |
The earliest any of these 6 term debts matures is one of those taken out in October, and it matures in 2033. The term debt taken out in November is set to mature in late 2054, the latest of the 6 debts.
The December debt matures in 2031, one of the September debts matures in 2033, the January debt matures in 2038, and the other September debt matures in 2039.
Missing from the report is the purpose of the debt. Prior versions had the purpose listed as “government” or “on-lending”; although there was one from 2010 that was labelled “TPP liabilities”.
The interest rates on these 3 debts range from 3.91% to 4.18%. However, the effective cost of debt (or the interest rate after tax deductions) ranges from 3.91% to 4.57%, up from the range of 2.82% to 4.68% we saw in 2022.
This new $936.4 million brings the total existing term debt traded by the provincial government since the UCP were elected to $40.141 billion, spread out over 90 transactions.
Keep in mind that this isn’t the total amount of term debt the UCP has taken out, as a handful of debts have since matured.
If we add the new debt borrowed during 2023 and subtract any term debts that matured last year, the total amount of term debt owned by the Alberta government sits at $90.7 billion, as of the end of 2023. More than two-fifths of that total debt (44.30%) was issued since the UCP were first elected nearly 5 years ago.
Even though the government owes less than $100 billion at the moment, there was a point during the UCP administration when Alberta’s total term debt was above $100 billion. However, several terms debts issued under the PCs have since matured, as well as 3 of the NDP’s debts, which has brought down the overall debt still owed.
A little less than half of the still outstanding debt (42.81%) was issued during the NDP administration. The remaining 12.9% or so was issued under the PC government, dating back to 2003. That means that 87% of the debt that Alberta currently owes was incurred under the NDP and UCP.
The UCP borrowing activities increased slightly last year, after shrinking in 2022. They borrowed only 4 term debts during 2022, but it increased to 6 in 2023.
During 2021, however, they took out 20, at a combined value of $9.31 billion.
Either way, here’s how the value of the debts look like broken down by month during the UCP’s term:
And by budget year.
Obviously, the pandemic had a lot to do with this. Their 4 highest months were during the first 5 months of the pandemic, totalling $17.4 billion.
The next largest month, was 6 months before the pandemic, however: September 2019 saw the UCP issuing $3 billion in term debts. Two months later, they issued $2.25 billion, making November 2019 the 7th highest month.
In fact, before the pandemic, the UCP had already borrowed nearly $7 billion in term debts. So, for every $6 or so in term debt the UCP has issued since taking power, $1 of it was issued before the pandemic.
It is interesting to see that the UCP has borrowed more term debt in the current budget year than they did in the 2022–2023 budget year, both in terms of the number of debts and the total value of those debts.
And we still have 3 more months left in the current budget year.
It’ll be interesting to see how the next 3 years of Danielle Smith’s term as premier plays out. Will she continue to increase the debt each year, or will this be the highest she goes?
