TORONTO (Reuters) – Caisse de depot et placement du Quebec announced a multibillion-dollar borrowing plan on Friday to refinance the giant Canadian pension fund’s short-term debt as it fortifies balance sheets decimated by the global crisis.
The Montreal-based Caisse, once Canada’s biggest pension fund manager by far, said the refinancing program could see it issue as much as C$8 billion ($7.6 billion) of bonds in Canada, the United States and Europe by the end of 2010, depending on market conditions.
The Caisse, which managed C$120.1 billion in assets at the end of last year reported C$39.8 billion in losses in 2008 amid global market turbulence that wreaked havoc on the portfolios of some of Canada’s chief pension funds.
“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 pension fund manager said in a statement.
“The issuance of debt in currencies other than the Canadian dollar will create a natural hedge by matching the currency of the source of financing with that of the investment.”
Appointing Michael Sabia as its new chief executive, the Caisse affected a management shakeup in April as it announced plans to manage risk more effectively.
In particular, it moved to beef up its risk management group, adding about 20 staff. At the same time, it cut 55 positions in areas including hedge fund investment.
And, in July, it hired a new chief investment officer, Roland Lescure, who took office in October.
The Caisse is an arm’s-length agency that manages investments for various public and private pension plans in the largely French-speaking province of Quebec.
($1=$1.05 Canadian) (Reporting by Pav Jordan; editing by Rob Wilson)