Canada "is cunningly divesting itself" of Constitutional and treaty obligations to assist natives, Eric Large of the Saddle Lake First Nation in Alberta said at a March 8 Senate hearing.
David Rubinoff, a Canadian provincial and municipal bond analyst at Moody's in Toronto said he couldn't say how the bonds would be rated until the groups request a rating.
Canadian natives may get a higher rating than US tribes because casino revenue isn't as reliable as property taxes, said Perry Israel, a lawyer at Orrick, Herrington & Sutcliffe LLP in Sacramento, California, who works on native financing.
"We are trying to get the rating agencies more comfortable with gaming revenue," Israel said on March 22. "If you are using real property taxes, my guess is they would be treated well by the rating agencies."
The new law includes measures aimed at ensuring bondholders get paid. Each of the tribes must put money into a reserve fund to cover any shortfall in property taxes. Canadian tribes collect C$44 million a year in such levies.
The law creates four agencies to manage investments, and help tribes set finance and tax policies. They will approve borrowing limits and can take over tax policies of a band that doesn't make its payments to bondholders.
"There will be fairly stringent qualifications for a band to be able to join," Valerie Blair, director of Canadian public finance ratings at Standard & Poor's in Toronto, said in an interview last month.
Moody's, Standard & Poor's and RBC Capital Markets advised the tribal leaders, who spent more than a decade preparing the law.
"Based on what we were discussing with them at the time, we felt they could get an investment grade credit rating," said Mike Butler, a director at RBC Capital Markets in Toronto, in an interview last month.
The new law requires almost all the money raised be used for projects such as roads, housing and sewers.
"We probably would take a look at such a security. We like infrastructure," Robert Featherby, vice president of fixed income at Jones Heward Investment Counsel Inc in Toronto, said earlier this month. Featherby helps manage the equivalent of US$1.2 billion.
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