S&P Global Raises Toronto’s Credit Rating for First Time in Over Two Decades

City’s updated long-term financial plan, prudent financial management, and the new Ontario–Toronto Deal which provides significant new funding for transit and housing.

By Staff Writer — CityWorks Toronto

For the first time in more than 20 years, Toronto’s credit outlook received a significant boost.

In 2024, S&P Global Ratings upgraded the City of Toronto’s long-term credit rating, citing improved financial planning, stronger budget discipline, and enhanced intergovernmental support — including the landmark Ontario–Toronto Deal that delivers new, stable funding for transit and housing.

While credit ratings may seem abstract, the implications are concrete: lower borrowing costs, greater financial stability, and increased confidence in the city’s long-term fiscal health.

Why Credit Ratings Matter

Credit ratings are used by investors to assess how likely a government is to meet its financial obligations. A higher rating signals lower risk — allowing cities to borrow money at lower interest rates when financing major infrastructure projects such as transit lines, housing, roads and water systems.

For Toronto, which manages one of the largest municipal capital programs in Canada, even small improvements in borrowing terms can translate into millions of dollars in long-term savings.

The upgrade marked a turning point after years of ratings that reflected ongoing structural pressures and limited fiscal flexibility.

A Clearer Long-Term Financial Plan

S&P Global pointed to Toronto’s updated long-term financial plan as a key factor in the upgrade. Over 2023 and 2024, the city adopted a more transparent, multi-year approach to budgeting — moving away from short-term fixes toward sustainable planning.

This included:

A realistic assessment of operating pressures
Gradual, predictable revenue measures
Improved alignment between operating budgets and capital commitments

By acknowledging challenges openly and planning for them over multiple years, the city demonstrated a stronger capacity to manage risk.

Prudent Financial Management

The rating agency also highlighted prudent financial management under the current administration. Budget decisions in 2024 focused on stabilizing core services, controlling cost growth, and avoiding one-time solutions that shift problems into future years.

Importantly, the city reduced its reliance on reserve drawdowns and improved its ability to fund priorities through recurring revenues — a key signal of financial discipline.

These steps contributed to what S&P described as a more resilient fiscal framework.

The Ontario–Toronto Deal: A Game Changer

Another major factor in the rating upgrade was the Ontario–Toronto Deal, which provided Toronto with significant new financial support and clarity.

The agreement included:

The upload of certain infrastructure responsibilities
Increased and more predictable funding for transit operations and capital needs
Enhanced support for housing-related investments

By strengthening Toronto’s relationship with the province and reducing pressure on the city’s operating budget, the deal improved Toronto’s overall credit profile.

For the first time in years, the city’s financial outlook reflected shared responsibility for regional growth rather than municipal isolation.

Confidence Beyond City Hall

The credit rating upgrade sent a signal not just to investors, but to residents, businesses and other governments: Toronto is on firmer financial footing.

For neighbourhoods across the city — including Etobicoke and Scarborough — this stability supports long-term investments in transit, housing, parks and infrastructure that residents rely on every day.

While challenges remain, the upgrade underscored that Toronto’s fiscal direction has changed.

A Milestone, Not a Finish Line

City officials were clear that the improved rating is not an endpoint, but a milestone. Sustaining it will require continued discipline, collaboration with other governments, and careful management of growth pressures.

Still, after more than two decades without an upgrade, the message was unmistakable: Toronto’s financial credibility has been restored — and recognized.

For a city built on ambition, that recognition matters.