Quebec’s Caisse, Struggling, Plans to Issue Pension Bonds

(November 19, 2009) – Caisse de dépôt et placement du Québec, the pension investment vehicle of the province of Quebec, is planning to issue $8 billion in pension bonds.

Following a loss of 25%—or $40 billion—in 2008, Caisse, as it often is referred to, will attempt to issue the bonds in 2010 in Canada, the United States, and Europe, according to Reuters.

“The proceeds of this refinancing program will be used to replace certain short-term credit instruments with longer-term debt, thus increasing the stability of financing sources for the Caisse,” the investment manager stated in a press release. According to the release, the varied currencies in which the bonds will be issued will help the fund hedge against exchange rates.

The bond issuance follows a year in which Caisse stood alone as the only Canadian pension giant not to issue bonuses, despite losses at all major funds. Also, the fund brought in new management in the past six months, with Michael Sabia arriving as the fund’s new CEO, and Roland Lescure as its CIO. As a result of such changes, the fund added 20 members to its risk management staff and cut tens of people in its alternatives’ divisions.

To read about Caisse’s and other Canadian pension funds’ proclivity for setting up internal private equity teams in the December issue of ai5000, subscribe for notifications here .