Bloomberg, Sean B. Pasternak, 27 September 2007
Canadian banks haven't been able to roll over all of their asset-backed commercial paper amid the global credit crunch, Bank of Montreal Chief Financial Officer Karen Maidment said.
``We've seen the rollovers haven't been 100 percent, so there has been some support provided to those,'' said Maidment, speaking at an investor conference today. ``That was particularly a problem in August, and it's much improved into September.''
Bank of Montreal spokesman Paul Deegan said in a telephone interview that Maidment was referring to the banking industry as a whole, and not her bank. Canada's fourth-largest lender continues to roll over commercial paper at ``prevailing market prices,'' Deegan said.
The failure of Canada's biggest banks to refinance all their commercial paper coming due shows the gridlock in the short-term debt market in Canada hasn't been limited to non-bank dealers such as Coventree Inc. Canadian banks are paying record interest-rate premiums to get investors to buy their asset- backed commercial paper amid the U.S. subprime crisis.
``It's been a disruptive market, but I think we can foresee it working through,'' Maidment said at a conference in Mont-Tremblant, Quebec sponsored by CIBC World Markets.
Canadian Imperial Bank of Commerce Chief Executive Officer Gerry McCaughey said the commercial paper market is ``better'' and has ``a feel of equilibrium right now.''
Canadian lenders such as Bank of Montreal have committed to provide so-called ``back-stop'' liquidity to finance their asset-backed commercial paper if investors refuse to roll over the debt, which have maturities of up to 364 days. The Toronto- based bank had C$42.7 billion ($42.7 billion) set aside for this purpose at the end of 2006, more than any other Canadian bank, according to CIBC World Markets estimates.
The bank-sponsored market for asset-backed paper contrasts with the debt sold by non-bank dealers such as Coventree. That market seized up last month after foreign banks such as Barclays Plc declined to provide emergency funding. A group of investors and banks said today it needs more time to convert some of that commercial paper into notes maturing in five to 10 years.
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Canadian banks haven't been able to roll over all of their asset-backed commercial paper amid the global credit crunch, Bank of Montreal Chief Financial Officer Karen Maidment said.
``We've seen the rollovers haven't been 100 percent, so there has been some support provided to those,'' said Maidment, speaking at an investor conference today. ``That was particularly a problem in August, and it's much improved into September.''
Bank of Montreal spokesman Paul Deegan said in a telephone interview that Maidment was referring to the banking industry as a whole, and not her bank. Canada's fourth-largest lender continues to roll over commercial paper at ``prevailing market prices,'' Deegan said.
The failure of Canada's biggest banks to refinance all their commercial paper coming due shows the gridlock in the short-term debt market in Canada hasn't been limited to non-bank dealers such as Coventree Inc. Canadian banks are paying record interest-rate premiums to get investors to buy their asset- backed commercial paper amid the U.S. subprime crisis.
``It's been a disruptive market, but I think we can foresee it working through,'' Maidment said at a conference in Mont-Tremblant, Quebec sponsored by CIBC World Markets.
Canadian Imperial Bank of Commerce Chief Executive Officer Gerry McCaughey said the commercial paper market is ``better'' and has ``a feel of equilibrium right now.''
Canadian lenders such as Bank of Montreal have committed to provide so-called ``back-stop'' liquidity to finance their asset-backed commercial paper if investors refuse to roll over the debt, which have maturities of up to 364 days. The Toronto- based bank had C$42.7 billion ($42.7 billion) set aside for this purpose at the end of 2006, more than any other Canadian bank, according to CIBC World Markets estimates.
The bank-sponsored market for asset-backed paper contrasts with the debt sold by non-bank dealers such as Coventree. That market seized up last month after foreign banks such as Barclays Plc declined to provide emergency funding. A group of investors and banks said today it needs more time to convert some of that commercial paper into notes maturing in five to 10 years.
