Tuesday, November 18, 2008

Canadian ABCP deal on track to close on time

(Globe & Mail Streetwise) It looks like it will be a merrier Christmas for investors stuck with frozen asset-backed commercial paper, with people close to the discussions saying that the deal to swap the seized ABCP for new bonds should finally be done by month-end with the transfer taking place early in December.

The oft-delayed deal was most recently pushed back by yet another month to the end of November after upheaval in credit markets distracted the banks and pension funds that need to sign off on the transaction. Sources said that one sticking point was the Caisse de dépôt et placement du Québec, which is having a rough year and wasn't focused on the restructuring as it dealt with other fires in its portfolio. But the Caisse wasn't alone, as many players in the deal were having trouble signing on the dotted line as credit markets plunged yet again in September and October.

So long as credit markets remain relatively unmoved for the next couple of weeks, which is a big assumption these days, some of those involved in the transaction say they expect to have the papers all signed by month's end. The transfer of assets, which involves moving some big dollar values, will have to wait until early December because banks are busy at month-end moving money and don't want to add extra to the mix.

Once the new bonds are issued in place of the old paper, ABCP owners who bought the paper from Canaccord Capital Inc. and Credential Securities should be able to collect their cash under the relief plans brought forward by those firms.

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