TEXT-S&P affirms Caisse de depot et placement du Quebec 'AAA' ratings

Fri Nov 9, 2012 1:10pm EST

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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