Canada Pension Plan Investment Board Act — C-8.3 6.1
Replacement security 6.1 (1) On the maturity of a designated security of a province that was issued before January 1, 1998, the Board shall purchase another security issued by that province if the Board is requested to do so, in writing, by the appropriate provincial Minister of that province at least 30 days before the date of maturity. Principal amount (2) The principal amount of the replacement security shall be not more than the principal outstanding under the maturing designated security. Term to maturity (3) The replacement security shall be for a term of 20 years. Interest (4) The replacement security shall bear interest at a rate fixed by the Board, in accordance with any agreement entered into between the Board and the Minister. The rate shall be substantially the same as the interest rate that the province would be required to pay if it were to borrow the same amount for the same term through the issuance of a security on the public capital market. Features of replacement security (5) The replacement security shall be issued to or payable to the Board and shall be expressed to be not negotiable and not transferable or assignable. Redemption at request of province (6) The Board shall redeem a designated security in whole or in part before maturity if (a) the Board is requested to do so, in writing, by the appropriate provincial Minister of a province at least 30 days before the proposed redemption date; and (b) the appropriate provincial Minister has agreed to pay on the proposed redemption date (i) any payments of principal or interest due on or before the proposed redemption date but not yet paid, (ii) interest on the principal amount being redeemed accrued to the proposed redemption date, and (iii) an amount equal to the present value of the remaining instalments of principal being redeemed and interest on that principal. Calculation of present value (7) For the purposes of subparagraph (6)(b)(iii), the present value shall be calculated by discounting the instalments of principal being redeemed and interest on that principal using an interest rate fixed by the Board, in accordance with any agreement entered into between the Board and the Minister of Finance. In fixing that rate, the Board shall choose a rate that (a) if the designated security to be redeemed was issued before January 1, 1998, is substantially the same as the rate that the Government of Canada would be required to pay if it were to borrow the principal amount being redeemed for a term equal to the remaining term of that designated security through the issuance of a security on the public capital market; or (b) if the designated security to be redeemed was issued on or after January 1, 1998, is substantially the same as the rate that the province would be required to pay if it were to borrow the principal amount being redeemed for a term equal to the remaining term of that designated security through the issuance of a security on the public capital market. Consolidation of securities (8) At the request of the provincial treasurer or other similar officer of a province, the Board may accept in the place of any series of designated securities of that province acquired during any consecutive period of not more than twelve months, on payment of any interest then accrued on the securities, another security of that province that is in an amount equal to the aggregate amount then outstanding of the designated securities of that series, and that bears interest at a rate determined by the Board. Obligation guaranteed by the provincial government (9) Any security purchased by the Board under this section must be an obligation of the government of a province or an obligation of an agent of Her Majesty in right of a province that is guaranteed as to principal and interest by that government. 2003, c. 5, s. 14