content_image/266243.jpg content_image/266244.jpg
At December 31, 2013, the Pension Plan held $15 million of Hydro One corporate bonds (2012 – $20 million) and $217 million of debt securities of the Province (2012 – $243 million). 

## Concentrations of Credit Risk 

Hydro One evaluated its Pension Plan’s asset portfolio for the existence of significant concentrations of credit risk as at December 31, 2013 and 2012. Concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, concentrations in a type of industry, and concentrations in individual funds. At December 31, 2013 and 2012, there were no significant concentrations (defined as greater than 10% of plan assets) of risk in the Pension Plan’s assets. 

The Pension Plan manages its counterparty credit risk with respect to bonds by investing in investment-grade and government bonds and with respect to derivative instruments by transacting only with financial institutions rated at least “A+” by Standard and Poor’s, Dominion Bond Rating Service, and Fitch Ratings, and “A1” by Moody’s Investors Service Inc., and also by utilizing exposure limits to each counterparty and ensuring that exposure is diversified across counterparties. The risk of default on transactions in listed securities is considered minimal, as the trade will fail if either party to the transaction does not meet its obligation. 

## Fair Value Measurements 

The following tables present the Pension Plan assets measured and recorded at fair value on a recurring basis and their level within the fair value hierarchy at December 31, 2013 and 2012: 

<img src='content_image/266243.jpg'>

1  At December 31, 2013, the total fair value of Pension Plan assets excludes $19 million of interest and dividends receivable, and $7 million relating to accruals for pension administration expense. 

<img src='content_image/266244.jpg'>

1  At December 31, 2012, the total fair value of Pension Plan assets excludes $16 million of interest and dividends receivable, $4 million relating to accruals for pending sales transactions, and $8 million relating to accruals for pension administration expense. 

See Note 13 – Fair Value of Financial Instruments and Risk Management for a description of levels within the fair value hierarchy. 

