New York, June 03, 2022 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings -and other ratings that are associated with the same analytical units for the rated entity(entities) listed below.
The review was conducted through a portfolio review discussion held on 27 May 2022 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. A possible outcome from periodic reviews is a referral of a rating to a rating committee.
This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.
Key Rating Considerations
The principal methodology used for these rated entities was Rating Transactions Based on the Credit Substitution Approach: Letter of Credit-backed, Insured and Guaranteed Debts published in May 2017. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Rating Transactions Based on the Credit Substitution Approach: Letter of Credit-backed, Insured and Guaranteed Debts
Third-party credit support: The goal of third-party credit support is to substitute the credit risk of the support provider for the credit risk of the issuer. For credit substitution to be achieved, investors must be insulated from the risk of payment default by the underlying obligor. Generally, the long-term ratings on credit-supported transactions track the long-term rating assigned to the credit provider.
Additional Considerations: Credit substitution requires more than just the presence of a credit support instrument from a third-party credit provider. The transaction documentation provides clear instructions to ensure that payments under the credit support facility are made when due and that there are no impediments to the timely payment of debt service. The key elements evaluated include: mitigation of bankruptcy risk of issuer; sufficiency of credit support; structural provisions which provide for the timely payment of debt service; bondholders to be paid in full if credit support expiration or termination will result in a change.
• Canada Housing Trust No.1
• CBC Monetization Trust
The principal methodology used for these rated entities was Public Pension Managers Methodology published in February 2020. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Public Pension Managers Methodology
Funding ratio: a measure of a public pension system's solvency measured as net assets relative to the pension benefit obligation. Other considerations may include benefit and contribution flexibility, transparency in the determination and disclosure of funding status.
Liquidity: indicates a pension manager's ability to meet short term obligations and level of preparedness to withstand a liquidity shock. Assessed using the sum of inflows relative to the sum of outflows. Other considerations may include portfolio risk relative to peers, asset illiquidity, contingent liabilities, and inflow and outflow trends.
Asset quality: indicates the stability of the investment portfolio over time and the public pension manager's ability to meet future obligations. Assessment metrics include high risk assets relative to gross assets. Other considerations may include asset class and geographic diversification, illiquidity, operational risk, asset correlations, foreign exchange risk and trends in the ratio itself.
Financial policy: indicates the financial risk tolerance of a public pension manager. Assessed by historical and projected leverage, and qualitatively by the public pension manager's capital structure, track record of liquidity and risk management, and adherence to commitments.
Qualitative adjustment factors: qualitative adjustments may be made to the key rating factors to reflect our assessment of political independence and corporate governance issues.
Support and structural analysis: ratings may be positively affected by our assessment of the capacity and willingness of its affiliates and public bodies to provide it with support.
Instrument-level rating considerations: individual instrument ratings also factor in notching considerations based on the seniority and collateral of the instruments.
• Caisse de depot et placement du Quebec
• California State Teachers' Retirement System
• Canada Pension Plan Investment Board
• OMERS Administration Corporation
• Ontario Teachers' Pension Plan Board
• Public Sector Pension Investment Board
The principal methodology used for these rated entities was Government-Related Issuers Methodology published in February 2020. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Government-Related Issuers Methodology
Assigning a Baseline Credit Assessment (BCA): The majority of Government-Related Issuers (GRIs) begin with an assessment of the GRI's standalone strength (i.e. BCA) – its ability to service and repay outstanding debt without recourse to extraordinary support from the supporting government - using the published sector-specific methodology that is most suitable for the predominant activities of the GRI. Our assessment of standalone strength includes any day-to-day support received from the government that can be clearly distinguished from extraordinary support. Support mechanisms, such as an obligation of the government to ensure the GRI's solvency and liquidity, are reflected in the BCA when they are legally or contractually documented.
Government uplift: The GRI's ratings include any uplift due to systemic support and typically focus on three structural factors and three factors explaining the level of the government's willingness to provide support. Structural factors address the legal and quasi-legal aspects of the government's relationship with the GRI and include: (1) guarantees, (2) ownership level and (3) barriers to support. The factors underlying willingness consider the softer connections between the two entities and include (4) the likelihood of government intervention, (5) political linkages and (6) economic importance. Support is determined using a joint default analysis framework which considers an estimate of the likelihood of extraordinary support, an assessment of the credit quality of the supporting government, and default correlation between the two entities.
GRIs without a BCA: In limited instances, it is not possible or meaningful to assign a BCA. The GRI is so inextricably linked to the government that a meaningful standalone BCA cannot be derived. In such cases, a top-down analytical approach is used that chiefly considers the ability and willingness of the government to provide timely support, instead of the usual bottom-up approach of starting with the BCA and then considering uplift towards the government's rating
• Business Development Bank of Canada
• Caisse de depot et placement du Quebec
• California State Teachers' Retirement System
• Canada Mortgage and Housing Corporation
• Canada Pension Plan Investment Board
• Canada Post Corporation
• Export Development Canada
• Farm Credit Canada
• Federal Home Loan Mortgage Corp.
• Federal National Mortgage Association
• Instit.para la Protec.al Ahorro Bancario
• OMERS Administration Corporation
• Ontario Teachers' Pension Plan Board
• Private Export Funding Corporation
• Public Sector Pension Investment Board
• Resolution Funding Corporation
The principal methodology used for these rated entities was Lease, Appropriation, Moral Obligation and Comparable Debt of US Local Governments Methodology published in March 2022. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Lease Appropriation, Moral Obligation and Comparable Debt of State and Local Governments Methodology
Quality of Asset: Metrics may include but are not limited to long term general obligation rating- or equivalent- of the issuer, credit quality of counterparties.
Program /Asset Essentiality: Metrics may include but are not limited to the importance of the asset or project to the core operations of the government.
Legal Structure and Program Mechanics: Metrics may include but are not limited to strength of clarity and timing of the administrative process to make the annual debt service appropriation decisions, reliability and timeliness of state aid payments; debt service coverage levels and priority of payments.
• California State Teachers' Retirement System
This announcement applies only to Rated Entities with EU rated, UK rated, EU endorsed and UK endorsed ratings. Rated Entities, with Non EU rated, non UK rated, non EU endorsed and non UK endorsed ratings may be referenced herein to the extent necessary, if they are part of the same analytical unit.
Please see the Issuer page on https://ratings.moodys.com for each of the ratings covered, most updated credit rating action, rating history, and Credit Rating action Press Release including the rating rationale and factors that could lead to a rating upgrade or downgrade.
This publication does not announce a credit rating action.
For any credit ratings referenced in this publication, please see the issuer/deal page on https://ratings.moodys.com
for the most updated credit rating action information and rating history.
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