O. Reg. 438/97: Eligible Investments and Related Financial Agreements (Municipal Act, 2001)
Regulation - LGIC
Bill or Act:
Municipal Act, 2001
Summary of Decision:
O. Reg. 74/16: Eligible Investments and Related Financial Agreements made under the Municipal Act, 2001 amending O. Reg. 438/97: Eligible Investments and Related Financial Agreements made under the Municipal Act, 2001 came into effect on March 30, 2016.
September 3, 2015
Summary of Proposal:
The Ministry of Municipal Affairs and Housing (MMAH) is proposing to amend the following regulation:
Reg. 438/97: Eligible Investments and Related Financial Agreements (Municipal Act, 2001)
Municipal Investments In Bank Debt:
Ontario municipalities hold large amounts of Canadian bank debt as part of their investment portfolios.
The current eligible investment regulation does not permit municipalities to hold investments which no longer meet at least one of the required minimum credit ratings.
The Association of Municipalities of Ontario (AMO) has requested that the Province amend the eligible investment regulation to lower the credit rating threshold for Canadian bank debt.
The proposed amendments would:
Lower the minimum credit rating threshold for institutions listed under paragraph 3.1 of O. Reg. 438/97 from Standard and Poor's "AA-" (or equivalent) to Standard and Poor's "A-" (or equivalent).
These lower credit ratings thresholds will allow municipalities to continue to hold Canadian bank debt in the event of downgrades, while still maintaining a relatively high minimum credit rating.
Ministry of Municipal Affairs
Municipal Finance Policy Branch
777 Bay St
March 30, 2016