Canadian Asset-Backed Commercial Paper Restructuring

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Uploaded by on Jan 12, 2009

Canada had $32 billion of Non Bank Asset-Backed Commercial Paper freeze on August 16, 2007 when owners got wind about there being U.S. sub-prime mortgages and high risk credit default swap contracts within the trusts.

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  • Canadian ABCP was more abusive than ABCP sold in other countries: (1) the Canadian bank regulator permitted a liquidity agreement that was of no use; and, (2) the international banks bought insurance from the Canadian ABCP trusts on reference credit portfolios that were 12.5 X the amount of collateral in the trusts that was funded by Canadian savers. Canadian savers had no idea their money was pledged as first security to the international banks to pay for their future credit defaults.

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