Quebec décote, Credit Score

[August1991]

In recent news, Quebec government bonds were reduced from AA+ to AA-

Hydro-Quebec bonds were already AA-.

(IMHO, Hydro-Quebec bonds are less risky than Quebec bonds but that's another story.... )

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And I'm not certain of this S&P rating scheme anyway.

Look what happened in 2008.

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The Quebec society has a huge Caisse. All things considers, this state pension scheme "borrows" at low rates based on the guarantee of taxes and then invests on world markets at higher rates. It is leveraged.

This is a potential Ponzi sceme.

[August1991]

Norway has a similar fund.

https://www.nbim.no/

[August1991]

Curious?

https://www.journaldemontreal.com/2025/04/17/5-questions-pour-mieux-comprendre-la-decote-du-quebec

[500channelsurfer]

The lowered credit score makes sense as Quebec has gone further and further into debt, and due to many factors including fundamental demographics, the provincial economy does not show signs of a major turnaround.

Most pension plans invest in similar ways to Quebec's caisse. It is not an outlier, but maybe less conventional than most.

Pension funds strictly may not be the same, strictly, as sovereign wealth funds. Alberta has one too. I am unfamiliar with if the caisse serves the same goal(s) as its Alberta and Norway counterparts, as the latter two's primary goal is to share current oil revenues with future generations.

The large credit rating agencies may have many of the same interests as some of the private banks and entities they rate. In the case of rating governments, there could easily be competing geopolitical and microeconomic interests. In this particular instance, we are looking at Canadian banks and utilities, which are some of the most sound corporations in the world, as opposed to increasingly de-regulated and risk-taking US banks around 2008. One particular utility will naturally have a more variable and more risky credit risk as one particularly large instance, such as a dam failure or pylon line collapse, will more greatly affect the particular utility over the province or government in general.

Edited April 22 by 500channelsurfer

[August1991]

13 minutes ago, 500channelsurfer said:

The lowered credit score makes sense as Quebec has gone further and further into debt, and due to many factors including fundamental demographics, the provincial economy does not show signs of a major turnaround.

Most pension plans invest in similar ways to Quebec's caisse. It is not an outlier, but maybe less conventional than most.

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The large credit rating agencies may have many of the same interests as some of the private banks and entities they rate.

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AI BS.

[500channelsurfer]

I do not post from AI. But I did read the Journal de Montréal article, a publication known for sensationalism, but which also does state some facts.

[August1991]

On 4/21/2025 at 11:20 PM, 500channelsurfer said:

I do not post from AI. But I did read the Journal de Montréal article, a publication known for sensationalism, but which also does state some facts.

Sorry, you do.

You post comments based on past comments.

You offer nothing new, original to the discussion.

[August1991]

The Quebec Government and Caisse are leveraged.

The Quebec government is borrowing on low rates and lending through the Caisse at high rates.

[August1991]

Parizeau understood this.

I suspect that Marc Lalonde might have understood this. Trudeau Snr didn't.