TEXT-S&P affirms Caisse de depot et placement du Quebec 'AAA' ratings
Overview -- We are affirming our ratings, including our 'AAA' long-term issuer credit rating, on the Caisse de depot et placement du Quebec (the fund). -- The ratings reflect our view of the Caisse's extremely strong financial position and strong liquidity that results from its legislated role as the sole asset manager for the majority of public-sector pension and insurance plans in Quebec. -- The stable outlook reflects our expectations of the fund continuing to build on the initiatives it has undertaken, including improving risk management, and maintaining stable financial performance during our two-year outlook horizon. Rating Action On Nov. 9, 2012, Standard & Poor's Ratings Services affirmed its ratings, including its 'AAA' long-term issuer credit rating, on the Caisse de depot et placement du Quebec (the fund). The outlook is stable. Rationale The ratings reflect Standard & Poor's opinion of the Caisse's extremely strong financial position and strong liquidity that results from its legislated role as the sole asset manager for the majority of public-sector pension and insurance plans in Quebec. Through its role, the fund maintains an extremely strong financial position, including robust liquidity to meet debt service obligations during potential financial market turbulence. We believe the Caisse's other primary credit strength is its operational independence from its sponsor, the Province of Quebec (A+/Stable/A-1+). In our view, its credit weaknesses include the ongoing volatility in the global investment environment that all asset managers, including the fund, continue to face; and potential changes to its mandate that could affect its independence or investment strategy. The Caisse continues to focus on streamlining processes after making substantial organizational changes in the past several years. Since the arrival of a new president and CEO in 2009, the fund has focused on depositors, repositioned its investment strategy and strengthened its risk management. It has made substantial progress, and has now earned through investment returns the C$40 billion it lost in 2008. We expect the Caisse will continue fine-tuning its operating procedures in the next couple of years. The Caisse was created in 1965 to administer Quebec Pension Plan (the Regie des rentes du Quebec) assets. It is one of the largest institutional investors in Canada. At year-end 2011, the Caisse had 25 depositors (with total net assets of C$159 billion), consisting of public pension plans, insurance plans, and other public and private bodies. Outlook The stable outlook reflects our expectations of the fund continuing to build on the initiatives it has undertaken, including improving risk management, and maintaining stable financial performance during our two-year outlook horizon. We also expect the fund to maintain its operational independence from Quebec, which we rate four notches below the Caisse. Accordingly, we could take a negative rating action if we believe the outcome of the newly elected provincial government's mandate review reduces the fund's independence or includes public policy initiatives that restrict its investment strategy. Currently, we view this as unlikely. Related Criteria And Research Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010 Ratings List Ratings Affirmed Caisse de depot et placement du Quebec Issuer credit rating AAA/Stable/A-1+ Senior unsecured debt AAA Commercial paper Global scale A-1+ Canada scale A-1(High) Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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