Obligation Caisse de depot et placement du Quebec 3.5% ( XS0516548384 ) en EUR

Société émettrice Caisse de depot et placement du Quebec
Prix sur le marché 100 %  ▲ 
Pays  Canada
Code ISIN  XS0516548384 ( en EUR )
Coupon 3.5% par an ( paiement annuel )
Echéance 23/06/2020 - Obligation échue



Prospectus brochure sous format PDF

Montant Minimal 50 000 EUR
Montant de l'émission 750 000 000 EUR
Description détaillée La Caisse de dépôt et placement du Québec est une institution financière publique québécoise qui gère des fonds de retraite et d'assurance, investissant à long terme au Québec, au Canada et à l'international dans divers actifs tels que les actions, les obligations, l'immobilier et les infrastructures.

L'obligation XS0516548384 émise par la Caisse de dépôt et placement du Québec (Canada), d'une valeur nominale de 750 000 000 EUR, avec un taux d'intérêt de 3,5%, échéant le 23/06/2020, a été intégralement remboursée à son prix de marché de 100%, avec un paiement annuel des intérêts et un montant minimum d'achat de 50 000 EUR.







PROSPECTUS DATED 18 JUNE 2010
CDP FINANCIAL INC.
(incorporated with limited liability under the laws of the Province of Québec, Canada)
EUR 750,000,000 3.50 per cent. Guaranteed Notes due June 2020
unconditionally and irrevocably guaranteed by
CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC
(a legal person constituted by statute under the laws of the Province of Québec, Canada)
The issue price of the EUR 750,000,000 3.50 per cent. Guaranteed Notes due June 2020 (the "Notes") of CDP
Financial Inc. (the "Issuer") is 99.436 per cent. of their principal amount.
Unless previously redeemed or cancelled, the Notes will be redeemed at their principal amount on 23 June 2020.
The Notes are subject to redemption in whole at their principal amount at the option of the Issuer at any time in the
event of certain changes affecting taxation in Canada or the Province of Québec.
The Notes will bear interest from 23 June 2010 at the rate of 3.50 per cent. per annum payable annually in arrear on
23 June each year commencing on 23 June 2011. Payments on the Notes will be made in Euros, without deduction
for or on account of taxes imposed or levied by Canada or the Province of Québec to the extent described under
"Terms and Conditions of the Notes -- Taxation". Caisse de dépôt et placement du Québec (the "Guarantor" or
"Caisse") will unconditionally and irrevocably guarantee the due and punctual payment of all amounts at any time
becoming due and payable in respect of the Notes. The Government of the Province of Québec has no obligations
under the Notes or the Guarantee of the Notes (as defined in "Terms and Conditions of the Notes -- Status and
Guarantee").
Application has been made to the Luxembourg Commission de Surveillance du Secteur Financier (the "CSSF"),
which is the Luxembourg competent authority for the purpose of Directive 2003/71/EC (the "Prospectus
Directive"), to approve this document as a Prospectus. Application has also been made for the Notes to be listed
on the official list of the Luxembourg Stock Exchange and admitted to trading on the Luxembourg Stock
Exchange's Regulated Market.
The Notes have not been, and will not be, registered under the United States Securities Act of 1933 (the "Securities
Act"). The Notes are being offered outside the United States by the Managers (as defined in "Subscription and
Sale") in accordance with Regulation S under the Securities Act ("Regulation S"), and may not be offered, sold or
delivered within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an
exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
The Notes will be in bearer form and in the denomination of EUR 50,000. The Notes will initially be in the form of a
temporary global note (the "Temporary Global Note"), without interest coupons, which will be deposited on or
around 23 June 2010 (the "Closing Date") with a common depositary for Euroclear Bank S.A./N.V. ("Euroclear")
and Clearstream Banking, société anonyme, Luxembourg ("Clearstream, Luxembourg"). The Temporary Global
Note will be exchangeable, in whole or in part, for interests in a permanent global note (the "Permanent Global
Note"), without interest coupons, not earlier than 40 days after the Closing Date upon certification as to
non-U.S. beneficial ownership. Interest payments in respect of the Notes cannot be collected without such
certification of non-U.S. beneficial ownership. The Permanent Global Note will be exchangeable in certain limited
circumstances in whole, but not in part, for Notes in definitive form in the denomination of EUR 50,000 each and
with interest coupons attached. See "Summary of Provisions Relating to the Notes in Global Form".
Joint Bookrunners
BofA Merrill Lynch
BNP PARIBAS
Crédit Agricole CIB
Co-Managers
Deutsche Bank
Goldman Sachs International
Morgan Stanley
National Bank of Canada
RBC Capital Markets
Société Générale Corporate
Financial Markets
& Investment Banking
18 June 2010


IMPORTANT NOTICES
This Prospectus comprises a prospectus for the purposes of Article 5.3 of the Prospectus Directive and for the
purposes of the Luxembourg Act dated 10 July 2005.
Each of the Issuer and the Guarantor accepts responsibility for the information contained in this Prospectus and
declares that, having taken all reasonable care to ensure that such is the case, the information contained in this
Prospectus to the best of its knowledge is in accordance with the facts and contains no omission likely to affect its
import.
The Issuer and the Guarantor have confirmed to the Managers named under "Subscription and Sale" below
that this Prospectus contains all information regarding the Issuer, the Guarantor and the Notes which is (in the
context of the issue of the Notes) material; such information is true and accurate in all material respects and is not
misleading in any material respect; any opinions, predictions or intentions expressed in this Prospectus on the part
of the Issuer or (as the case may be) the Guarantor are honestly held or made and are not misleading in any material
respect; this Prospectus does not omit to state any material fact necessary to make such information, opinions,
predictions or intentions (in such context) not misleading in any material respect; and all proper enquiries have been
made to ascertain and to verify the foregoing.
Neither the Issuer nor the Guarantor has authorised the making or provision of any representation or
information regarding the Issuer, the Guarantor or the Notes other than as contained in this Prospectus or as
approved for such purpose by the Issuer and the Guarantor. Any such representation or information should not be
relied upon as having been authorised by the Issuer, the Guarantor or the Managers.
Neither the delivery of this Prospectus nor the offering, sale or delivery of any Note shall in any circumstances
create any implication that there has been no adverse change, or any event reasonably likely to involve any adverse
change, in the condition (financial or otherwise) of the Issuer or the Guarantor since the date of this Prospectus.
This Prospectus does not constitute an offer of, or an invitation to subscribe for or purchase, any Notes.
The distribution of this Prospectus and the offering, sale and delivery of Notes in certain jurisdictions may be
restricted by law. Persons into whose possession this Prospectus comes are required by the Issuer, the Guarantor and
the Managers to inform themselves about and to observe any such restrictions. For a description of certain
restrictions on offers, sales and deliveries of Notes and on distribution of this Prospectus and other offering material
relating to the Notes, see "Subscription and Sale".
In particular, the Notes have not been and will not be registered under the Securities Act. Subject to certain
exceptions, Notes may not be offered, sold or delivered within the United States or to U.S. persons.
In this Prospectus, unless otherwise specified, references to a "Member State" are references to a Member
State of the European Economic Area, references to "$", or "dollars" are to Canadian dollars, references to "U.S.$"
are to U.S. dollars, references to "E", "EUR" or "Euro" are to the currency introduced at the start of the third stage
of European economic and monetary union and as defined in Article 2 of Council Regulation (EC) No. 974/98 of
3 May 1998 on the introduction of the euro, as amended. References to "billions" are to thousands of millions.
Certain figures included in this Prospectus have been subject to rounding adjustments; accordingly, figures
shown for the same category presented in different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures which precede them.
In connection with the issue of the Notes, Merrill Lynch International (the "Stabilising Manager") (or
persons acting on behalf of the Stabilising Manager) may over allot Notes or effect transactions with a view to
supporting the price of the Notes at a level higher than that which might otherwise prevail. However, there is
no assurance that the Stabilising Manager (or persons acting on behalf of the Stabilising Manager) will
undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate
public disclosure of the terms of the offer of the Notes is made and, if begun, may be ended at any time, but it
must end no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the
allotment of the Notes. Any stabilisation action or over-allotment must be conducted by the Stabilising
Manager (or persons acting on behalf of the Stabilising Manager) in accordance with all applicable laws and
rules.
2


FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements or information (collectively referred to in this
note as "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking
statements are typically identified by words such as "projected", "estimate", "may", "increase", "anticipate",
"believe", "expect", "plan", "intend" or similar words suggesting future outcomes or statements regarding an
outlook. All statements other than statements of historical fact contained in this Prospectus are forward-looking
statements. By their very nature, forward-looking statements involve numerous assumptions and uncertainties. A
variety of factors, many of which are beyond the Caisse Group's (as defined herein) control, may cause actual
results to differ materially from the expectations expressed in the forward-looking statements. These factors
include, but are not limited to, risks related to financial instruments, fluctuations in investment returns, foreign
exchange rate fluctuations, adverse changes in the credit markets, the Caisse Group's ability to access the capital
markets for debt financing, changes in the real estate markets in Canada, the United States and elsewhere, regulatory
changes and risks more generally associated with the markets and the Caisse Group's portfolio of investments. See
also "Risk Factors". The foregoing list of factors is not exhaustive. When reading forward-looking statements,
investors and others should carefully consider the foregoing factors and other uncertainties and potential events and
should not place any undue reliance on such statements. Neither the Issuer nor the Caisse undertakes to update any
forward-looking statement, whether written or oral, that may be made from time to time by or on the Caisse Group's
behalf.
3


CONTENTS
Page
IMPORTANT NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM . . . . . . . . . . . . . . . .
22
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
ORGANISATIONAL STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
DESCRIPTION OF THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
DESCRIPTION OF THE GUARANTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
RECENT DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF THE CAISSE . . . . . . . . . . . . . . . . . . . .
43
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . .
50
PRINCIPAL STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
51
DESCRIPTION OF OTHER INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52
SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55
SUBSCRIPTION AND SALE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59
INDEX OF DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61
CDP FINANCIAL AUDITORS' CONSENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A-1
CAISSE AUDITOR'S CONSENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A-2
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-1
4


SUMMARY
This summary must be read as an introduction to this Prospectus and any decision to invest in the Notes should
be based on a consideration of the Prospectus as a whole. No civil liability attaches to the persons responsible for
this summary in any Member State which has implemented the Prospectus Directive solely on the basis of this
summary, including any translation thereof, unless it is misleading, inaccurate or inconsistent when read together
with the other parts of this Prospectus. Where a claim relating to the information contained in this Prospectus is
brought before a court in a Member State, the plaintiff may, under the national legislation of the Member State, be
required to bear the costs of translating the Prospectus before the legal proceedings are initiated.
Words and expressions defined in "Terms and Conditions of the Notes" below or elsewhere in this Prospectus
have the same meanings in this summary.
Issuer:
CDP Financial Inc.
Guarantor:
Caisse de dépôt et placement du Québec.
Joint Bookrunners:
Merrill Lynch International, BNP Paribas and Crédit Agricole
Corporate and Investment Bank.
Co-Managers:
Deutsche Bank AG, London Branch, Goldman Sachs International,
Morgan Stanley & Co. International plc, National Bank Financial Inc.,
Royal Bank of Canada Europe Limited and Société Générale.
Notes:
EUR 750,000,000 3.50 per cent. Guaranteed Notes due June 2020.
Issue Price:
99.436 per cent. of the principal amount of the Notes.
Issue Date:
Expected to be on or about 23 June 2010.
Use of Proceeds:
The net proceeds from the issue of the Notes will be used by the Issuer
to repay short-term debt, in order to extend the maturity profile of the
Caisse Group's debt. This offering will not result in any additional
leverage for the Caisse.
Interest:
The Notes will bear interest from 23 June 2010 at a rate of 3.50 per
cent. per annum payable annually in arrear on 23 June in each year
commencing on 23 June 2011.
Status and Guarantee:
The Notes are senior, unsubordinated, unconditional and unsecured
obligations of the Issuer. The Guarantee of the Notes is a senior,
unsubordinated, unconditional and unsecured obligation of the
Guarantor.
Form and Denomination:
The Notes will be issued in bearer form in the denomination of
EUR 50,000.
Final Redemption:
The Notes will be redeemed at their principal amount on 23 June 2020,
subject to Condition 4(b) (Redemption for tax reasons).
Tax Redemption:
Early redemption will be permitted in whole for tax reasons as
described in Condition 4(b) (Redemption for tax reasons).
Ratings:
The Notes are expected to be rated AAA by S&P, Aaa by Moody's and
AAA by DBRS.
Withholding Tax:
All payments of principal, interest and deemed interest in respect of
the Notes and the Coupons will be made free and clear of Canadian
and Québec withholding taxes, as the case may be, unless the
withholding is required by law. In that event, the Issuer (or the
Guarantor, as the case may be) will (subject as provided in Condition
6 (Taxation)) pay such Additional Amounts as will result in the
Noteholders and Couponholders receiving such amounts as they
would have received in respect of such Notes had no such withholding
been required.
Governing Law:
English law, except in relation to the Guarantee of the Notes which is
governed by the laws of the Province of Québec.
5


Listing and Trading:
Application has been made for the Notes to be listed on the official list
of the Luxembourg Stock Exchange and admitted to trading on the
Luxembourg Stock Exchange's Regulated Market.
Fiscal Agent and Paying Agent:
Citibank, N.A., London Branch.
Clearing Systems:
Euroclear, Clearstream, Luxembourg.
Selling Restrictions:
See "Subscription and Sale".
Risk Factors:
There are certain factors that may affect (a) the Issuer's ability to fulfil
its obligations under the Notes and (b) the Guarantor's ability to fulfil
its obligations under the Guarantee of the Notes. These are set out in
the "Risk Factors" section in this Prospectus and include the fact that
the Issuer is a financing vehicle for the Caisse Group. The risk factors
associated with the Guarantor are also set out in the "Risk Factors"
section in this Prospectus and include exposure to credit risk, market
risk, operational risk and liquidity risk. See "Risk Factors" for a
description of certain risk factors which should be considered by
prospective purchasers of the Notes.
Financial Information:
See "Selected Financial Information" and "Index to Financial
Statements".
ISIN:
XS0516548384
Common Code:
051654838
6


RISK FACTORS
In addition to the other information included in this Prospectus, including the matters addressed under
"Forward-Looking Statements", you should carefully consider the following risks before investing in the Notes.
References in this Prospectus to the "Caisse Group" include the Issuer, the Guarantor and other entities under the
control of the Guarantor.
The Caisse Group is subject to certain risks and hazards due to the nature of the business activities it conducts.
The risks discussed below, any of which could materially and adversely affect its business, financial condition, cash
flows, performance and results of operations, are not the only risks the Caisse Group faces. The Caisse Group may
experience additional risks and uncertainties not currently known to it; or, as a result of developments occurring in
the future, conditions that it currently deems to be immaterial may also materially and adversely affect its business,
financial condition, cash flows, performance and results of operations. In any such case, you may lose all or a part
of your original investment and not realise any return you may have expected thereon.
Risks Relating to the Caisse Group's Business
The Caisse Group's performance and its business may in the future be materially, adversely affected by
Canadian, U.S. and other international financial market and economic conditions.
The Caisse Group's performance and its business may in the future be materially affected by Canadian, U.S.
and other financial market and economic conditions, including the following factors: the liquidity of the global
financial markets; the level and volatility of debt and equity prices, interest rates and currency and commodity
prices; fluctuations in the real estate markets; investor sentiment; corporate or other scandals that reduce confidence
in the financial markets; inflation; the availability and cost of capital and credit; the occurrence of natural disasters,
acts of war or terrorism; and the degree to which Canadian, U.S. or other international economies are expanding or
experiencing recessionary pressures.
The Caisse generally maintains large trading portfolios in the fixed income and equity markets, including
positions in securities in markets that may lack liquidity or pricing transparency, such as the asset-backed term note
("ABTN") market formerly known as the asset-backed commercial paper ("ABCP") market, and has significant
investment positions in private equity and real estate, markets that may also lack liquidity or pricing transparency.
The mark-to-market values of its businesses and investments are affected by many factors, including the Caisse
Group's success in proprietary positioning; volatility in interest rates and equity and debt markets; credit spreads
and availability of liquidity in the capital markets; credit ratings; and other economic and business factors. The
Caisse Group anticipates that its trading and principal investment businesses will continue to experience volatility
and there can be no assurance that such volatility relating to the above factors or other conditions that may affect
pricing or the Caisse Group's ability to realise satisfactory returns from such investments could not materially
adversely affect its financial condition, results of operations and cash flows.
Some of the Caisse Group's investments, including its private equity and real estate investments, rely on the
use of leverage, and its ability to achieve attractive rates of return on investments will depend on its ability to access
sufficient sources of indebtedness at attractive rates. The absence of available sources of senior debt financing for
extended periods of time could therefore materially and adversely affect its corporate private equity, infrastructure
and real estate businesses. In addition, an increase in either the general levels of interest rates or in the risk spread
demanded by sources of capital would make it more expensive to finance those businesses' investments. Increases
in interest rates could also make it more difficult to locate and consummate private equity investments because other
potential buyers, including operating companies acting as strategic buyers, may be able to bid for an asset at a higher
price due to a lower overall cost of capital.
Investments in highly leveraged entities are inherently more sensitive to declines in revenues, increases in
expenses and interest rates and adverse economic, market and industry developments. As a result, the risk of loss
associated with a leveraged entity is generally greater than for companies with comparatively less debt.
When the Caisse Group's Private Equity and Real Estate sectors' existing portfolio investments reach the point
where debt incurred to finance those investments mature in significant amounts and must be either repaid or
refinanced, those investments may materially suffer if they have generated insufficient cash flow to repay maturing
debt or if they have declined in value and there is insufficient capacity and availability in the financing markets to
permit them to refinance maturing debt on satisfactory terms, or at all. If the current unusually limited availability of
financing for such purposes were to persist for several years, when significant amounts of the debt incurred to
finance the Caisse Group's Private Equity and Real Estate sectors' existing portfolio investments start to come due,
these portfolio investments could be materially and adversely affected.
The Caisse, the Issuer and the other members of the Caisse Group are exposed to various currency exchange
risks which can affect liquidity, profit and loss, depositors' net assets, capital position and asset value. Although the
7


Caisse Group has entered into arrangements to hedge some of these currency risks, the Caisse Group continues to be
exposed to significant currency risks such that fluctuations in exchange rates between currencies could have a
material impact, from year to year, on its financial condition, results of operations and cash flows.
The Caisse Group may experience further unrealised decreases in value of the Caisse Group's financial
instruments and other losses related to volatile and illiquid market conditions.
Market volatility, illiquid market conditions and disruptions in the credit markets have made it difficult to value
certain of the Caisse's assets, including its ABTNs. See "Description of the Guarantor -- Asset-Backed Term
Notes". As at 31 December 2009, the Caisse has recorded cumulative unrealised decreases in value of $5.1 billion in
the aggregate against its portfolio of ABTN securities. Subsequent valuations, in light of factors then prevailing,
may result in significant changes in the values of these and other assets in future periods, which could be positive or
negative. In addition, at the time of any sales of these assets, the price the Caisse ultimately realises will depend on
the demand and liquidity in the market at that time and may be materially higher or lower than their current fair
value.
Under the ABCP restructuring plan, the Caisse could be required to finance margin calls associated with
the assets underlying the new long term notes issued under the restructuring of third-party and
bank-sponsored ABTN and supported by credit facilities.
Under the ABCP restructuring plan, the Caisse committed to provide funding facilities of up to $6.5 billion to
finance potential margin calls associated with the assets underlying the new long term notes issued under the
restructuring of third-party and bank-sponsored ABTN and supported by credit facilities. The terms of the
restructuring provide that margin calls may not be made in respect of virtually all the conduits covered by the
restructuring during the 18 months following 21 January 2009. After the expiry of the moratorium in July 2010, an
additional margin call may occur only if two spread loss triggers are reached and if the collateral already available to
the asset providers is insufficient. Any margin calls could have an adverse effect on the Caisse's financial position
and results of operations in future periods. See "Description of the Guarantor -- Asset-Backed Term Notes".
Changes in standards, laws and regulations may adversely affect the Caisse Group's business.
Changes made to laws, regulations and policies governing the Caisse Group and its operations, as well as to
those governing the depositors of the Caisse, the domestic tax exempt status of the Caisse, the foreign tax status of
the Caisse under the laws of foreign jurisdictions and treaties between such jurisdictions and Canada, including
changes in their interpretation or their implementation, may adversely affect the Caisse Group's business. Although
the Caisse has no expectations that such changes will be implemented, there can be no assurance that the statutory
requirement for certain depositors to deposit funds in their possession with the Caisse will be maintained in the
future. In addition, the regulations regarding restrictions on withdrawals of participation deposits by depositors
could be amended to reduce or eliminate the limitations in the amount and in the availability period of withdrawals,
which could adversely affect the Caisse Group's liquidity and its investment returns. The timing, form and effect of
any potential amendment to such laws, regulations and policies may not be ascertainable.
Defaults by a large financial institution could adversely affect the Caisse and the financial markets
generally.
The commercial soundness of many financial institutions may be closely interrelated as a result of credit,
trading, clearing or other relationships between institutions. As a result, concerns about, or a default or threatened
default by, one institution could lead to significant market-wide liquidity and credit problems, losses or defaults by
other institutions. This is sometimes referred to as "systemic risk" and may adversely affect financial
intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges with which
the Caisse interacts on a daily basis and, therefore, could adversely affect the Caisse.
In the future, it may be more difficult to generate, in a timely manner and at a reasonable cost, the funds
required to satisfy the Caisse Group's financial needs as they arise.
The management of financing risk is intended to ensure that the Caisse Group can depend on reliable sources
of funds to satisfy the Caisse Group's depositors' and other clients' needs, in normal conditions as well as in adverse
conditions. In the case of the Caisse, financing risk corresponds to the possibility that the Caisse may not always be
able to fulfill its commitments without having to obtain funds at abnormally high cost or sell assets. Adverse
changes in the financial markets could increase the Caisse Group's financing risk.
8


The Caisse Group's business, results and liquidity may be adversely affected by deterioration in the credit
quality of, or defaults by, third parties who owe the Caisse Group money, securities or other assets or whose
securities or obligations it holds.
The Caisse Group is exposed to the risk that third parties that owe it money, securities or other assets will not
fulfill their obligations. These parties may default on their obligations to the Caisse Group due to bankruptcy, lack of
liquidity, operational failure or other reasons. A failure of a significant market participant, or even concerns about a
default by such an institution, could lead to significant liquidity problems, losses or defaults by other institutions,
which in turn could adversely affect the Caisse Group.
The Caisse Group is also subject to the risk that its rights against third parties may not be enforceable in all
circumstances. In addition, deterioration in the credit quality of third parties whose securities or obligations the
Caisse Group holds could result in losses and/or adversely affect its ability to grant security or otherwise use those
securities or obligations for liquidity purposes. A significant downgrade in the credit ratings of its counterparties
could also have a negative impact on its results. While in many cases the Caisse Group is permitted to require
additional collateral from counterparties that experience financial difficulty, disputes may arise as to the amount of
collateral it is entitled to receive and the value of pledged assets. The termination of contracts and the foreclosure on
collateral may subject the Caisse Group to claims for the improper exercise of its rights. Default rates, downgrades
and disputes with counterparties as to the valuation of collateral increase significantly in times of market stress and
illiquidity.
While the Caisse Group has reduced its exposure to derivative transactions, it remains party to a large number
of derivative transactions, including credit derivatives. Many of these derivative instruments are individually
negotiated and non-standardised, which can make exiting, transferring or settling the position difficult. Many credit
derivatives require that the Caisse Group delivers to the counterparty the underlying security, loan or other
obligation in order to receive payment. In a number of cases, the Caisse Group does not hold the underlying security,
loan or other obligation and may not be able to obtain the underlying security, loan or other obligation. This could
cause the Caisse Group to forfeit the payments due to it under these contracts or result in settlement delays with the
attendant credit and operational risk as well as increased costs to it.
Derivative contracts and other transactions entered into with third parties are not always confirmed by the
counterparties on a timely basis. While the transaction remains unconfirmed, the Caisse Group is subject to
heightened credit and operational risk and in the event of a default may find it more difficult to enforce the contract.
The Caisse may incur significant losses as a result of the limitations inherent to risk management
processes.
In 2009, the Caisse made risk management one of its top priorities and, as a result of the events of the recent
financial crisis, accelerated implementation of the development plan adopted by the Board of Directors of the
Caisse in 2008 to raise its risk oversight and assessment methods to the level of the industry's best practices. See
"Description of the Guarantor -- Risk Management". However, risk management processes cannot anticipate every
economic and financial outcome in all market environments or the specifics and timing of such outcomes. Market
conditions during the latter part of 2007 and 2008 involved unprecedented dislocations that were largely
unanticipated and highlight the limitations inherent in using historical data to manage risk.
If actual experience differs from management's estimates used in the preparation of financial statements,
the Caisse's combined results of operations or financial condition could be adversely affected.
The preparation of financial statements in conformity with generally accepted accounting principles in Canada
("Canadian GAAP") requires the application of accounting policies that often involve a significant degree of
judgment. The Caisse's critical accounting policies require the use of assumptions, some of which are highly
uncertain at the time of estimation. Market volatility may make it more difficult to value certain of the Caisse's
invested assets and the obligations and collateral relating to certain financial instruments issued or held by the
Caisse. These estimates, by their nature, are based on judgment and current facts and circumstances. Therefore,
actual results could differ from these estimates, possibly in the near term, and could have a material effect on the
combined financial statements.
Neither the Issuer nor the Caisse is required to file continuous disclosure documents with any securities
commission or similar regulatory authority in any province or territory of Canada, in the U.S. or in Europe.
Neither the Issuer nor the Caisse is a reporting issuer under applicable Canadian, U.S. or European securities
laws and therefore neither the Issuer nor the Caisse is required to file continuous disclosure documents, reports and
other information with any securities commission or similar regulatory authority in any province or territory of
Canada, in the U.S. or in Europe. There is, and there will continue to be, limited publicly-available information
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regarding the Issuer and the Caisse. On 25 January 2010, the Caisse announced that it intended to provide an
overview of its results at mid-year, every year.
Substantially all of the financial information presented in this Prospectus is presented as at 31 December 2009.
Except as otherwise indicated, you should not assume that such information is accurate as of any other date.
Subsequent developments may have affected our financial condition, cash flows, performance and results of
operations.
The Caisse Group's financial statements are prepared in accordance with Canadian GAAP, which differs
from International Financial Reporting Standards (IFRS), and the Caisse Group is not obliged to comply
with requirements of Canadian, U.S. or European securities laws applicable to financial statements.
The audited combined financial statements of the Caisse as at 31 December, 2009 and 2008 and the audited
financial statements of the Issuer as at 31 December, 2009 and 2008, included in this Prospectus, are stated in
Canadian dollars, have been audited under Canadian generally accepted auditing standards, and have been prepared
in accordance with Canadian GAAP. Canadian GAAP differs from International Financial Reporting Standards
("IFRS") in significant respects. As a result, the Caisse Group's financial statements are not comparable to financial
statements prepared in accordance with IFRS, or to financial statements prepared by registrants or foreign reporting
issuers under Canadian, U.S. or European securities laws.
The Caisse's Real Estate sector is subject to the risks inherent in the ownership and operation of real estate
and the construction and development of real estate.
Investments by the Caisse's Real Estate sector are subject to the risks inherent in the ownership and operation
of real estate and real estate related businesses and assets. These risks include those associated with the burdens of
ownership of real property, general and local economic conditions, changes in supply of and demand for competing
properties in an area (as a result for instance of overbuilding), the financial resources of tenants, changes in building,
environmental and other laws, energy and supply shortages, various uninsured or uninsurable risks, natural
disasters, changes in government regulations (such as rent control), changes in real property tax rates, changes in
interest rates, the reduced availability of mortgage funds which may render the sale or refinancing of properties
difficult or impracticable, negative developments in the economy that depress travel activity and the related use of
certain of the Caisse Group's properties, environmental liabilities, contingent liabilities on disposition of assets,
terrorist attacks, war and other factors that are beyond the Caisse Group's control.
During 2008, real estate markets in Canada, the United States and Europe generally experienced increases in
capitalisation rates and declines in value as a result of the overall economic decline and the limited availability of
financing. This challenging environment also continued into 2009.
Finally, real estate properties like the ones the Caisse Group owns are illiquid assets and may be difficult to sell,
especially if local or international market conditions continue to be poor.
The Caisse Group is exposed to risks associated with a breakdown or malfunction of its business
infrastructure.
Deficiency in the information technology infrastructures or computer systems of the Caisse resulting in
breakdowns or other malfunctions may cause delays or interruption in the operations of the Caisse Group. In the
event of breakdowns or other malfunctions, the ability of the Caisse to manage its portfolio investments or its ability
to conduct its business may be adversely affected.
The Caisse Group's future performance depends partly on its ability to recruit, retain and/or motivate key
employees.
The Caisse Group's future performance depends partly on its ability to recruit, retain and/or motivate key
employees. In addition, intense rivalry to attract the best personnel pervades the wealth management and financial
services industry. The Caisse Group cannot be certain that it will be able to continue to recruit, retain and motivate
key employees, even though this is one of the objectives of its human resources management policies and practices.
The enforceability of judgments against the Caisse Group and its directors and officers is limited under the
Caisse Act and the enforceability of judgments against the Auditor General of Québec is limited under the
Auditor General Act (Québec).
Under the Caisse Act, the President and Chief Executive Officer and other members of the Board of Directors
of the Caisse, the officers and employees of the Caisse and the members of the boards of directors and the officers
and employees of wholly-owned subsidiaries of the Caisse, including the Issuer, cannot be sued for any official act
performed in good faith in the exercise of their functions. In addition, except on a question of jurisdiction, no
recourse under article 33 of the Code of Civil Procedure (Québec) (the superintending and reforming power of the
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