By Fergal Smith

Canada lost one of its coveted triple-A ratings on Wednesday when Fitch downgraded it for the first time, citing the billions of dollars in emergency aid Ottawa has spent to help bridge the downturn caused by COVID-19 pandemic shutdowns.

Fitch cut the rating to "AA+" from "AAA," making it the first time since August 2004 that the ratings agency did not give Canada top marks. Canada had been one of a handful of countries with a AAA rating from all three of the main agencies.

Standard & Poor's and Moody's still give Canadian debt the highest rating, and they told Reuters they had nothing at this time to add beyond their latest reports.

"That AAA had been cherished through a lot of hard work and prudence since the 90s," said Michael Goshko, corporate risk manager at Western Union Business Solutions.

Ottawa is rolling out more than C$150 billion in direct aid to support the economy, and Fitch said this would drive the general government deficit up to 16.1% of GDP in 2020.

Canada is expected to have a consolidated gross general government debt of 115.1% of GDP in 2020, up from 88.3% of GDP in 2019, Fitch said.

"A worse case scenario for Canadians and the economy would have been to not act," Finance Minister Bill Morneau said in a statement to Reuters.

"Canada is still a very strong credit in a relative sense," said Derek Holt, vice President of capital markets economics at Scotiabank.

Andrew Scheer, leader of the official opposition Conservative Party, blamed Liberal Prime Minister Justin Trudeau.

"Canada entered the pandemic in a weakened and vulnerable position because Trudeau spent the cupboards bare when times were good," Scheer said on Twitter. "He's letting you down."

Financial market reaction was muted, with the Canadian dollar slightly extending its decline to 1.3617 to the U.S. dollar, or 73.44 U.S. cents, while Canada's 10-year yield was little changed at 0.545%.

"Investors are not seeing this as an isolated event, but perhaps the first in a series of downgrades across many countries as a result of recent emergency spending," said Colin Cieszynski at SIA Wealth Management.

(Additional reporting by Ashwini Raj in Bengaluru and Kelsey Johnson in Ottawa; Editing by Nick Zieminski and Alistair Bell)