SAN FRANCISCO — Standard & Poor’s last week assigned its A1-plus issuer credit rating to the California Public Employees’ Retirement System.
This is the first time Standard & Poor’s has rated CalPERS, said analyst Parry Young. The rating, Standard & Poor’s highest short-term rating, is based on the strong creditworthiness of the system and its sponsors, which include the state of California, along with the system’s very strong liquidity. That liquidity would enable it to readily meet any short-term funding obligations under its credit enhancement program, according to the rating agency.
CalPERS began planning its credit enhancement program in 2003, and booked its first transaction in early 2005.
As of June 30, the credit enhancement program had roughly $562 million in contingent liabilities, with about $1.4 million of fee income, according to the Standard & Poor’s report, which was released Wednesday.
The program is authorized to make up to $5 billion in commitments; well within the minimum $20 billion in highly-liquid assets CalPERS has on hand, according to Standard & Poor’s.
The program was created to earn fee income for CalPERS on an expected zero loss-underwriting basis. It already carries ratings from Moody’s Investors Service and Fitch Ratings.
Moody’s assigns CalPERS its Aaa long-term issuer rating and P-1 short-term issuer rating. Fitch assigns its long-term AAA rating and short-term F1-plus rating.
CalPERS is the largest pension fund in the nation, with nearly 1.5 million members and a market value of assets totaling $212 billion as of June 30, 2006.
