DBRS Comments on PSP Capital Inc.’s U.S. Commercial Paper Notes Limit Increase

DBRS notes today that PSP Capital Inc. (PSP Capital or the Issuer) has increased the limit on its U.S. Commercial Paper Notes program (U.S. CP Program) to USD 5 billion from USD 3 billion. DBRS anticipated the limit increase, which does not adversely affect the Issuer’s rating of R-1 (high) with a Stable trend. PSP Capital is the financing subsidiary of the Public Sector Pension Investment Board (PSPIB or the Fund). The Commercial Paper Notes (U.S. CP Notes) issued under the U.S. CP Program will be unconditionally and irrevocably guaranteed by PSPIB and will rank pari passu with all other unsecured and unsubordinated obligations of the Issuer.

The Fund continues to adhere to the “DBRS Criteria: Commercial Paper Liquidity Support for Non-Bank Issuers,” specifically Appendix A – Liquidity Requirements for CP Programs of Canadian Pension Funds. The Fund maintains a robust liquidity position with highly liquid assets, as defined by DBRS, well in excess of DBRS’s liquidity requirement for the rating. Additionally, the Fund maintains an overall internal limit on total recourse debt to adjusted net assets that is consistent with the rating.

DBRS expects that the proceeds from the issuance of U.S. CP Notes will be used by the Issuer to loan funds to PSPIB, and/or entities owned by PSPIB, to finance investment activities and for general corporate purposes.

To DBRS’s knowledge, no material adverse developments have occurred in PSPIB’s operations or financial position since DBRS’s most recent rating review in November 2014.

For increased clarity, DBRS is now differentiating its ratings for the U.S. Commercial Paper Notes and the Canadian Short-Term Promissory Notes, which historically were grouped together under Short-Term Promissory Notes.

Notes:
The applicable methodology is Rating Canadian Public Pension Funds & Related Exclusive Asset Managers (May 2014). Applicable criteria are Commercial Paper Liquidity Support for Non-Bank Issuers (February 2014) and Guarantees and Other Forms of Explicit Support (February 2015), which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.