Proposed Short-Term Debt Exemption In Canada – A Chart Simplifying The Credit Rating Requirement

This is a follow-up to a recently posted blog on January 30, 2014 titled, Changes Proposed for Exempt Offerings of Short-Term Debt and Securitized Products in Canada."

The designated rating provision under the existing Short-Term Debt Exemption in Section 2.35 of National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106) requires an issuer of short-term debt, such as commercial paper, to have at least one credit rating that meets or exceeds a specified minimum rating ( the "credit rating threshold condition"). Although an issuer of short-term debt does not require more than one credit rating, if the issuer obtains another credit rating of its commercial paper, each rating must be at or above the specified minimum. This additional rating requirement has been termed the "split rating condition". The CSA has modifiedthe "split rating condition" in proposed amendments to the Short-Term Debt Exemption in s. 2.35 of NI 45-106.