The Bankwatch

More on the Canadian plan to fix the $35bn ABCP market.  Turns out the Canadian Banks have indicated receptivity, but did not participate yet.  The $35Bn appears to represent ABCP owned by various private funds. 

ABCP committee plans road show to sell deal

Noticeably absent, however, were Canadian banks, which have yet to agree on their role in restructuring the market.

There are three categories of ABCP involved.

ABCP committee plans road show to sell deal

1. About $3-billion of the total holdings in ABCP contain traditional assets, such as credit card receivables and auto loans, and those trusts will be worked out separately and on a series by series basis and holders will be given “TA tracking notes.”
2. A second tranch of $26-billion in assets, which are largely trusts holding synthetic products, will be split into two separate pooled trusts, MAP1, which will hold $15-billion in assets and MAP 2, which will hold $11-billion in assets. Most corporate investors will likely be placed into MAP 2.
3. A third category ABCP holding about $3-billion in assets has too much exposure to sub-prime loans and will be worked out separately on a series by series basis.

Despite Banks apparent non participation, they have agreed to assist with lines of credit to assist in developing liquidity.  Clearly this is a delicate balancing act, that will only be as the weakest link in the chain.  The quote taken from the article, and used as the blog post title, sums it up.