Caisse Centrale Desjardins du Québec (CCDQ) is set to be replaced as the issuer on its covered bond and other debt issuance programmes by Fédération des caisses Desjardins du Québec, after they announced a plan to amalgamate the two entities.

Owned by the federation, CCDQ has until now acted as treasurer for the Desjardins group and its financial agent on Canadian and international markets.

“The structure of Desjardins Group has evolved over time, and changes in the Federation’s activities have gradually eliminated the advantages, particularly with regard to efficiency and economies of scale, justifying the creation and maintenance of Caisse centrale as a separate treasurer,” the boards of the two entities said yesterday (Thursday). “With this amalgamation, all of the activities related to the issuance of securities of Desjardins Group will be combined under a single issuer, resulting in a significant reduction in efforts relating to financial disclosures.

“The project is consistent with the anticipated revision of the Act Respecting Financial Services Cooperatives, which aims, among other things, to strengthen the financial solidarity within Desjardins Group. The combination of the Federation and Caisse centrale activities and balance sheets under a single entity will contribute to make the cooperative more integrated and simplified for its members, clients, investors and partners.”

Under the plan, the federation will become the issuer under CCDQ’s debt programmes and they said that they believe no downgrade or withdrawal of credit ratings will result from the move.

If approved by the two institutions’ members in votes on 28 November, the amalgamation is expected to become effective on 1 January 2017, subject to regulatory approval, notably by the Autorié des marchés financiers.

CCDQ has three euro benchmark issues totalling Eu3bn (C$4.4bn) outstanding off its Eu5bn legislative covered bond programme, according to its latest investor report, and a US$1.5bn (C$1.5bn) issue off a legacy Eu5bn structured programme.

Its last benchmark covered bond was a Eu1bn five year deal in November 2015.