British Columbia Finance Minister Kevin Falcon at the B.C. Legislature in Victoria, B.C., on Friday August 26, 2011.Darryl Dyck/ The Canadian Press
The unspoken slogan for B.C. Finance Minister Kevin Falcon's European tour this week might be: British Columbia – not a bit like Greece.
When the B.C. government floated two global bonds this year, European banks snapped up $2.25-billion (U.S.) worth – and the province had to turn investors away. This week, bankers in Paris, Frankfurt, Munich, Zurich and London opened their doors to Mr. Falcon to hear his pitch for British Columbia as a safe harbour for investment dollars.
Those bankers are a nervous bunch these days, Mr. Falcon observed Thursday. While he was flying to London, the Greek government was getting ready to suspend thousands of civil servants and to cut public-sector salaries in a bid to stave off a crippling default.
With Europe at the centre of a global financial crisis, British Columbia's triple-A credit rating and relatively low debt-to-GDP ratio are gaining more attention than the last time a finance minister from B.C. made the rounds there almost 10 years ago.
"With so much economic uncertainty, there is probably not a better time to go into these markets with the great story we have," Mr. Falcon said in an interview. "Most of them are not in a real positive frame of mind right now. There is a lot of nervousness."
For British Columbia, the over-subscribed bond sales mean lower borrowing costs. Mr. Falcon estimates B.C. will save $9-million over the life of the bonds, compared with interest it would have paid had the province stuck to domestic bond markets.
The province will go back into the market in the next few months – it still needs to raise about $7-billion (Canadian) more in this fiscal year. About a quarter of that money is expected to come from European investors.
But Mr. Falcon's tour is not just about selling bonds. He wants to lure capital for major capital projects and private-sector opportunities. "We want to expand, to diversify, and ensure they know about our opportunities," he said. "There is a lot of capital looking for a safe harbour."
Mr. Falcon faces difficult challenges to meet budget targets and to move the province back to a balanced budget by 2013, as mandated by law. But compared with the mood in Europe, he'd hear little sympathy for his problems. Europe's banks have laid off tens of thousands of workers this year, and more cuts are likely. Mr. Falcon, meanwhile, is raising the possibility of lifting the lid on a two-year-wage freeze for public servants next year.