DBRS Publishes Finalized Rating Canadian Public Pension Funds & Related Exclusive Asset Managers Methodology

DBRS Limited (DBRS) published its methodology “Rating Canadian Public Pension Funds & Related Exclusive Asset Managers.”

The methodology is effective as of July 25, 2018.

On May 2, 2018, DBRS published a request for comments on the proposed updated version of the methodology. The comment period has ended, and DBRS has received comments from two commenters, all of whom wished to have their names withheld.

A comment was made to define what would constitute “conservatively managed” recourse debt. DBRS would like to reiterate that a pension fund’s or asset manager’s level of recourse debt is expected to leave considerable room for cyclical fluctuations in asset values and that the actual level of indebtedness of pension funds and asset managers will be reviewed on a case-by-case basis. In addition, DBRS expects adequate debt policies to be in place, especially with respect to the use of leverage within the organization, recourse and non-recourse borrowing limits and the types and terms of financing instruments used. Accordingly, no change to the May 2, 2018, methodology has been made in response to this comment.

To address the other comments, DBRS has made minor changes to the AAA rating expectations under the plan sponsors and financial resources categories. No other changes were made to the methodology from the May 2, 2018, version.

DBRS deems the changes noted above, as well as the changes published on May 2, 2018, to not be material and has determined that no ratings are, or will be, changed as a result of any of these updates.

Notes:
DBRS rating definitions and the terms for use of such ratings are available at www.dbrs.com.

DBRS’s methodologies and criteria are available at www.dbrs.com or by contacting info@dbrs.com.