On Tuesday Vancouver's stellar credit rating took another serious hit, when Moody's Investor Services revising the city's debt rating, downgraded it from Aaa-Plus to AAA-Negative, affecting how the city's potential loan partners will view it, when it comes to borrowing money for key projects. No doubt, Vancouver will now be seen as a far greater risk.

Moody's has directly linked the city's revision to additional financial risks it is taking for constructing the Olympic athletes' village, saying: 'the change in outlook also reflects an immediate deterioration in Vancouver 's liquidity position, stemming from the city's cash injections into the Olympic Village project'.

Similarly, a few weeks ago, another major credit rating agency i. e. Standard & Poors, also used the Olympic village issue to place Vancouver on a 'credit watch'. However, it refrained from downgrading the city's 'AA-plus' rating, only issuing a warning that the city's actions bore watching, leading Vancouver Mayor Gregor Robertson to warn the credit watch meant Vancouver city could face higher borrowing costs.

Issued at the same time as the federal budget, the Moody's report reveals $105-million payments for the Olympic Village project has caused a serious depletion of the city's cash reserves. As well, the report notes Vancouver 's exposure on the $1-billion project 'is roughly 1.5 times the city's current tax-supported debt'. And, even though the sale of the condominium units after the 2010 Olympic games could help Vancouver recover the complete or a part of money spent, David Rubinoff, a senior vice president for Moody's and lead analyst for the City of Vancouver states: 'substantial risks remain respecting the commercial aspects of the condominium project and could result in some measure of this liability becoming tax-supported'.

Further, Moody's believes 'additional cost overruns, which would increase the total amount of the financing required to complete the project and the likelihood that the related debt could become tax-supported', are some of the factors that could lead to an actual downgrade in the city's rating, causing Moody's to 'monitor the city's decisions respecting the financing of the development'.