Strong, the cantons have high solvency

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Strong, the cantons have high solvency


Credit Suisse believes that the cantons remain financially strong despite the effects of the coronavirus crisis. Only Valais sees its credit rating down.


Several cantons, including Vaud, whose seat of government is shown here, are awarded the highest rating,


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Several cantons, including Vaud, whose seat of government is shown here, are awarded the highest rating, “AAA”.


Despite the effects of the novel coronavirus pandemic, which are still difficult to estimate, the Swiss cantons remain financially solid, judges Credit Suisse. While public authorities still display very high solvency, the number two Swiss bank confirms its credit ratings for almost all cantons, except Valais.

In its document, “Credit manual of the Swiss cantons 2020” published Wednesday, the establishment of the Paradeplatz notes that the cantons, as well as a selection of six Swiss cities, benefit for the most part from healthy finances. These public authorities can also rely on solid economic fundamentals as well as on the Confederation’s maximum “AAA” credit rating, which supports the solvency of the cantons due to financial equalization.

If the year 2020 will remain historically marked by the seal of the Covid-19 pandemic, Switzerland seems to be recovering relatively quickly from the health crisis and its consequences. However, their impact on cantonal and municipal finances is still difficult to estimate, says Credit Suisse.

According to the first information obtained by the bank, the cantons point to a drop in their tax revenue for next year, while the high costs linked to urgent measures following the Covid-19 pandemic will weigh heavily from this year. The cantons do not consider themselves less in a good position from a financial point of view.

The best rating for five cantons

Most of them report having sufficient financial reserves to absorb the decline in tax revenues. These can also be based on payments from the Swiss National Bank (SNB) as well as on strict budgetary discipline. For the time being, they do not plan for tax increases, additional borrowing, or investment cancellations.

The 2020 version of the credit manual only mentions one rating downgrade, namely the one reserved for Valais. Reduced to “Low AA”, it is however only reduced by a notch, not because of the effects of the coronavirus pandemic, but in view of the low commercial profile and the significant indebtedness of the “Old Country”. The prospect remains “stable”.

The experts of the bank with two veils also reduced the prospect of the rating maintained at “Mid AA” of Basel-Country, which is now turning negative. The canton presents, like Valais, a high debt, even if the situation has improved on the income side. The debt largely reflects the refinancing of the pension fund.

The cantons of Zurich, Zug, Vaud, Nidwalden and Schwyz are awarded the highest rating, “AAA”. Those of Jura, Ticino and Neuchâtel are found at the bottom of the table, all keeping their very good “High A” rating.

For the six municipalities under review, Credit Suisse is not making any adjustments. The City of Zurich occupies the top of the ranking, with its “High AA” rating. The city on the banks of the Limmat is ahead of Bern and Winterthur (“Mid AA” rating), followed by Geneva (“Low AA”), Lausanne (“High A”) and Lugano (“Mid A”).

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