Compare — and contrast

Russell Wangersky
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This will be a short column, an easy read. Most of it, in fact, is someone else’s words.

Here’s then-premier Kathy Dunderdale, talking about the largest project borrowing in Canadian history, the money borrowed by the provincial government and Nalcor to build Muskrat Falls.

“We just locked in $5 billion over a 40-year term at a blended rate of 3.8 per cent — that’s a historically low interest rate. The savings to electricity customers in this province, homeowners and businesses, is well over a billion dollars in today’s dollars.

“We extracted tremendous value today from the markets. Our offering was over-subscribed by the market. We had a very high level of interest and uptake and we achieved the highest possible credit rating. Many large infrastructure projects do not achieve this complete level of financing certainty until construction is completed, but the objective was to obtain this certainty early, which was possible with the benefit of the federal loan guarantee.

“The order of magnitude of this financing cannot be underestimated. This bond placement is one of the largest in Canadian history. TD Securities and Goldman Sachs were our co-lead arrangers and, along with a syndicate of financial institutions, raised the $5 billion required to fund the project.

“I want to commend the financing team at Nalcor and the provincial government for their diligence and commitment during this process. Underlying all this work is the fact that we have a robust business case and the benefits of this project are exceptional.”

It’s an interesting spin, but what’s also interesting, when it comes to the robust business case, is that a business case was completely unnecessary.

Here’s Steve Halliday, the managing director and head of global credit trading and distribution at TD. Asked about the structure of the Muskrat Falls financing arrangements by The Financial Post, he had this to say:

“The benefit of the guarantee was that no one had to look at the merits of the underlying project. … That was a key consideration for us, not only in terms of how we rated the risk from a bank or underwriter perspective, but also in terms of making sure the investors agreed with our assessment, and counsel’s assessment, as to the strength of the guarantee.”

As The Post put it in their Jan. 31 story: “What financial institution would want to bear that much risk in a complicated construction project with that much potential for surprise? The strength of the federal guarantee put the bank at ease.”

Imagine: a deal so ironclad, you don’t even have to worry about looking at the project involved. You don’t even have to consider it.

Words fail me.

Except for this: it says lots about the single-mindedness of governments.

It says a lot less about confidence in the strength of the project.

Russell Wangersky is editorial page editor of the St. John’s Telegram. He can be reached by email at

Organizations: TD Securities, Goldman Sachs, Financial Post

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