Earlier this month, the provincial government updated their Term Debt Issues document, which lists all the term debt they still have outstanding.
It’s been nearly 6 months since I last wrote about the Alberta government’s term debt, so I thought I’d write this brief update. This time, however, I thought I’d summarize the new debt taken out during the first half of 2022.
| # of debts | Total debt | |
|---|---|---|
| January | 2 | $0.686 billion |
| June | 1 | $0.800 billion |
| Total | 20 | $1.486 billion |
The earliest any of these 3 debts matures is the most recent one, taken out last month and which matures in 2033. The first debt taken out in January is set to mature in late 2038, and the second on matures in about 30 years: June 2052.
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 2.82% to 4.15%. However, the effective cost of debt (or the interest rate after tax deductions) ranges from 2.82% to 4.222%.
This new $1.486 billion brings the total term debt traded by the provincial government since the UCP were elected to $$39.96 billion, spread out over 84 transactions.
The new debt borrowed during the first half of 2022 has pushed the total amount of term debt owned by the Alberta government over $100 billion, to $102.72 billion. More than a third of that total debt (38.9%) has been issued since the UCP were elected nearly 3 years ago.
A little less than half of it (48.41%) was issued during the NDP administration. The remaining 12.7% or so was issued under the PC government, dating back to 2003.
Keep in mind, however, that it took the NDP 4 years to rack up $49.72 billion in debt. The UCP have accumulated nearly $40 billion in a little over 3 years. That gives the NDP an average of $12.4 billion a year, and the UCP an average of $12.3 billion a year.
At this rate, the UCP will have borrowed a total of $49.2 billion during their 4-year term, which will be just shy of the $49.7 billion that the NDP borrowed during their 4-year term.
By the 2023 election, provincial debt could total as much as $111.8 billion, and the UCP portion would make up 43.99% of it, assuming they keep borrowing at this rate. That’s including subtracting the one debt that matures before then.
Now, that being said, the UCP government has only borrowed 3 term debts during the first 6 months of 2022. During the same period last year, they took out 16, at a combined value of $7.757 billion. So, it seems to me that their borrowing has slowed this year.
Either way, here’s how 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 in term debt the UCP has issued since taking power, $1 of it was issued before the pandemic.
