Newsroom
2007
CWB credit rating still strong despite downgrade
Winnipeg – Investors can be confident in placing their money in CWB instruments the CWB said today despite a downgrading of the issuer credit rating by Standard & Poor’s from AAA to AA+.
Chief Financial Officer, Brita Chell reminded investors that while the CWB’s long-term issuer credit rating has been lowered, its debt, which is guaranteed by the Government of Canada, has maintained a AAA/A-1+ rating.
Chell noted that the newly-assigned AA+ credit rating is a very high rating with a miniscule risk of default. While it is too early to assess the impact of today’s announcement, she said the CWB will be working closely with investors to explain the changes.
“This downgrade is entirely due to reduced government support for the CWB’s role as a single-desk seller of wheat and barley,” Chell said, “It is not, in any way, a reflection of the CWB’s operational management or current financial condition.”
In the analysis released by S&P;, the agency observes that while international threats to the CWB’s operations have declined since the collapse of World Trade Organization (WTO) talks, domestic hostilities have increased.
S&P; notes that even though support for the CWB remains strong among farmers, the government continues to forge ahead with its agenda. It points to the formation of a task force, the imposition of a ‘gag order’, the upcoming barley plebiscite as well as the termination of CWB president and CEO Adrian Measner as examples of a deteriorating relationship with the federal government. According to its rationale, “Standard & Poor’s expects that government support of the CWB will continue to deteriorate as long as the current government lasts.”
CWB board chair and farmer-elected director, Ken Ritter said the S&P; downgrade is a clear indication that the Conservative government’s current approach is directly affecting western Canadian farmers.
“Investors, like our grain customers, are looking for safe, secure investments and stability with their business partners," Ritter said. “If we cannot achieve this, farmers' bottom lines will ultimately be affected."
Ritter said this also shows that the government’s plan of a strong and viable CWB alongside a fully open market is unrealistic.
“This is an independent third party that has looked at the facts and concluded the CWB wouldn’t carry the same clout if its single desk is eliminated.”
Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world. One of Canada’s biggest exporters, the Winnipeg-based company sells grain to more than 70 countries and returns all sales revenue, less marketing costs, to Prairie farmers.
To view full report by Standard & Poor, click here (PDF).
For more information, please contact:
Heather Frayne
Tel: (204) 983-3101
Cell: (204) 479-2451