Sask. government's credit rating downgraded by Standard and Poor's

Weak commodity prices and higher government capital spending have prompted Standard and Poor's to downgrade Saskatchewan's credit rating.

The agency says it has lowered the rating todouble-A from double-A plus.

Standard and Poor's says the downgrade reflects Saskatchewan's weakened budget performance and growing debt thanks to low oil, natural gas and potash prices.

The agency says despite some tax reforms and cuts inthe government's recent budget, the province's position is now weaker than it was last year.

It also cites higher spending plans under the Saskatchewan Builds Capital Program.

Outlook changed to 'stable'

On the upside, Standard and Poor's says theoutlook for the province is stableand forecaststhe economy will record modest growth in the next two years.

"Weaker commodity prices and elevated capital spending are negatively affecting the Province of Saskatchewan's budgetary performance and debt burden," the agency said Wednesday.

"S&P Global Ratings lowered its long-term issuer credit and senior unsecured debts ratings on the province ... to 'AA' from 'AA+''.

2nd credit rating cut in last year

At the same time the agency affirmed its 'A-1+' global scale and 'A-1 (High)' Canada scale short-term debt ratings on the province.

This is the second time the agency has cut Saskatchewan's credit rating over the past 12 months.

Last June, Standard and Poor'sdowngraded the province'scredit rating from triple-A to double-A plus due to low resource prices.

Credit ratings can affect how much a government pays to borrow money.