PrefBlog

Bloomberg reports:

Investors holding about C$33 billion ($33.3 billion) of short-term debt in Canada agreed to swap it for longer-term notes, ending a four-month freeze in trading of the securities.
…
Today’s agreement, which covers 20 of the 22 non-bank trusts, has been approved “in principle” by the investor group as well as the trust sponsors. Some lenders, including “several of the large Canadian banks,” have said they may provide credit facilities, according to the statement.

Toronto-Dominion Bank, Canada’s second-biggest lender, is “not a participant in the agreement,” bank spokesman Simon Townsend said. The Toronto-based bank had originally resisted supporting the restructuring agreement because it didn’t underwrite the debt in the first place. The C$80 billion market for commercial paper sold by lenders such as Royal Bank of Canada hasn’t been interrupted by the freeze in non-bank paper.
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Crawford said that based on the advice of financial adviser JPMorgan Chase & Co., most of the restructured notes will receive a AAA rating, according to the statement.

The group didn’t say how much investors will receive on the dollar, according to spokesman Mark Boutet.

The commercial paper will be restructured differently depending on the type of asset that backs it, the statement said.

Things were looking grim after last week’s hiccup. There are no details on how the margin of the CDSs that have been written will work … the only thing that would make sense to me is that an equity tranche will be issued and paid out of what would otherwise have gone to the senior noteholders. Or, perhaps, the lines from the banks will be more richly rewarded (again, out of the senior noteholders’ hides). But I will report new developments as they are released…

This entry was posted on Sunday, December 23rd, 2007 at 10:10 pm and is filed under Sub-Prime!. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.