One of Canada's largest institutional fund managers, Caisse de depot et placement du Quebec (Caisse) plans to issue bonds worth C$8 billion ($7.6 billion) in Canada, US and Europe, in order to stabilise its financial position badly affected by the global economic crisis.
Caisse intends to use the proceeds of the bond sales to replace certain outstanding short-term credit instruments with longer term debt, it said in a statement. The fund expects to complete the sale by the end of 2010.
Caisse said that the bond sales would not increase the total leverage. The issuance of debt in currencies other than the Canadian dollar would create a natural hedge by matching the currency of the source of financing with that of the investment, it further stated.
Quebec-based Caisse is a global fund manager and one of the world's top ten real estate asset managers. It had assets worth CS$120 billion under its management as at the end of 2008, mostly public and private pension funds and insurance plans. The funds are invested in financial markets in Canada as well as around the world.
The fund reported a huge loss of C$39.8 billion in 2008, following the global financial crisis and slump in asset valuations, resulting in a negative return of 25 per cent to its depositors.
DBRS, a Toronto-based credit rating agency said in a statement that the bond issue programme would be run through CDP Financial Inc., the financing arm of Caisse, and will allow for the issuance of both Canadian and US dollar term notes with irrevocable and unconditional guarantee from Caisse, issuable in series with terms up to 30 years.