S&P Global raised the City of Toronto’s credit rating from AA to AA+ on October 23, 2024, with a stable outlook. It was the first S&P upgrade in more than two decades. The rating does not cut your property tax directly. What it can do is lower the interest the City pays when it borrows.
What a credit rating is
A credit rating is a grade from an independent agency on how likely a borrower is to repay on time. The City sells bonds to fund roads, water pipes, transit and housing, and investors read the grades before they set the interest rate they ask for. A stronger grade means lower risk, so investors accept less.
Three agencies grade Toronto. According to the City, Moody’s has rated it Aa1 with a stable outlook since 2002, and DBRS Morningstar has rated it AA, also stable, since 2002. S&P’s new AA+ now sits level with Moody’s band, and DBRS is the one a notch lower.
What S&P changed
The old AA grade had held for 23 years. The last time the City held AA+ from S&P was from 1992 to 2001. We found no later rating change on the City’s pages, so check its news page if much time has passed.
The City’s release lists the reasons S&P gave: Council’s direction through the Updated Long Term Financial Plan, prudent management and a multi-year approach to budgeting, a commitment to fund operating and capital needs with strong reserves, and support from other governments, including the Ontario-Toronto New Deal.
Under that deal the province took over the Gardiner Expressway and the Don Valley Parkway, which the City says frees about $1.9 billion over ten years. Spread evenly, that is about $190 million a year, roughly 1% of an $18.9 billion operating budget. The even split is our simplification.
From grade to interest cost
The City says a higher rating gives access to lower long-term borrowing costs, but it publishes no dollar figure. So this example only shows the arithmetic. A ten-year bond of $1 billion at 4.00% costs $40 million a year in interest. At 4.10% it costs $41 million. A tenth of a point is $1 million a year, or $10 million over ten years. Both rates are invented for the illustration.
The 2026 to 2035 capital plan is $63.1 billion. Only part of it is borrowed, since reserves and other governments pay a share, but a small edge on that part adds up over a decade.
Why it is not a tax cut
Nothing in the upgrade reduced a rate, created a rebate or changed an assessment. The 2026 budget, adopted February 10, 2026, raises residential property tax by 0.7% plus a 1.5% City Building Fund levy, about 2.2% combined. On an average assessed home of $692,140 the City puts that at about $91.53 a year.
That levy links to the rating in one way. DBRS Morningstar said in 2022 that the levy will service higher debt levels. It gives lenders a dedicated repayment stream, and it also appears on your bill. Try your own numbers in the property tax calculator.
A good grade is not low debt
AA+ says the City looks able to carry its debt. It does not say the debt is small. Moody’s, in a 2022 release, pointed to Toronto’s position as Canada’s largest municipal economy, strong fiscal planning, excellent liquidity and very strong debt affordability.
Your own borrowing
The City’s rating has no effect on your mortgage rate. Lenders judge your income, debts and history. But the logic matches. On a $600,000 mortgage with a 25-year amortization and semi-annual compounding, the payment at 4.00% is about $3,156 a month and at 5.90% about $3,803. That is about $647 more a month for a 1.9 point rise. Test yours in the mortgage calculator.
What we could not confirm
The release gave no total debt, no dollar saving and no rate on a specific bond, so we left them out. Treat any article quoting a precise saving with caution unless it points to a City or agency document. See also the Land Transfer Tax calculator, and the full set of mortgage calculators.
Sources
- City of Toronto, S&P Global raises credit rating to AA+
- City of Toronto, Aa1 rating reaffirmed by Moody’s
- City of Toronto, AA rating reaffirmed by DBRS Morningstar
Common questions
When did S&P upgrade Toronto to AA+?
Does AA+ lower my property tax?
What are Toronto's other ratings?
Last reviewed: . Figures come from the official sources listed above. How we check the numbers and our editorial policy.