TEXT - S&P rate PSP Capital proposed commercial paper issue

Fri Jan 18, 2013 10:10am EST

Related Topics

Jan 18 - Standard & Poor's Ratings Services today said it assigned its
'A-1+' global scale commercial paper (CP) rating to PSP Capital Inc.'s proposed
U.S. CP issue of up to US$3 billion.

"The rating reflects our view of the creditworthiness of the Public Sector 
Pension Investment Board, which provides PSP Capital with an unconditional and 
irrevocable guarantee for the CP," said Standard & Poor's credit analyst 
Jennifer Love. 

The Public Sector Pension Investment Board (PSPIB or the fund; 
AAA/Stable/A-1+) was established to invest the net pension contributions of 
four federally sponsored pension plans (the Public Service, Canadian Forces, 
Royal Canadian Mounted Police, and Reserve Force). We expect net contributions 
for these plans to remain positive for at least 15 years, contributing to what 
we believe to be PSPIB's very strong net asset and liquidity position. We 
believe these contributions are highly reliable because they are required by 
law and Standard & Poor's expects no changes to the applicable legislation. 

Although a Crown corporation with federal sponsors, PSPIB does not receive any 
form of guarantee from its sponsors. We believe the fund benefits from a 
strong corporate governance framework that ensures its management operates at 
arm's length from the federal government and acts in the best interest of its 
contributors and beneficiaries. We also believe that PSPIB benefits from its 
mandate of focusing on managing transferred assets without the distraction of 
direct responsibility for dealing with changes in the actuarial funding status 
of the underlying pension plans. Further supporting the ratings is a legal 
opinion the fund received, saying its debt obligations are senior to and rank 
ahead of amounts that become payable to the plans.

PSPIB issues debt through PSP Capital, a wholly owned and fully guaranteed 
subsidiary, to leverage its real estate, renewable resources, and 
infrastructure portfolios. As of Dec. 11, 2012, PSP Capital had about C$4.3 
billion outstanding combined in its Canadian CP and medium-term note programs. 
The U.S. CP program will optimize the fund's cost of debt and reduce its use 
of forward contracts for currency hedging. 

RATINGS LIST
PSP Capital Inc.

Rating Assigned
 Proposed U.S. comm. paper issue
  Global scale                                 A-1+
FILED UNDER: