TORONTO, Dec. 16 /CNW/ - (BND.UN) - Investment Grade Trust announces that it received a credit event notice today from UBS AG with respect to CIT Group Inc. as a result of that entity filing for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code.
The Investment Grade Trust (the "Fund") is an investment trust established under the laws of the Province of Ontario on January 28, 2003. The Fund will terminate operations on December 31, 2012 (the "Termination Date") and the net assets will be distributed pro rata to holders of units (the "Unitholders"). The Fund has exposure, by way of a share basket forward agreement, to a portfolio of debt securities and certain derivatives contracts held by Bond Trust.
One of the derivatives contracts held by Bond Trust is a Swap Contract with UBS AG that provides a currency hedge, smoothes out the cash flow of the portfolio of debt securities and provides additional yield through exposure to additional debt securities. CIT Group Inc. is one of the debt issuers referenced in the Swap Contract and the occurrence of a credit event with respect to CIT Group Inc. results in a decrease of 0.495% in the yield of the Swap Contract. This reduction in yield will result in an approximately $0.05 reduction in the annual distributions paid to Unitholders by the Fund.
The Fund will use its best efforts to delay the implementation of the reduction in the distributions paid by the Fund to Unitholders and, barring any other credit events, the Fund expects the distribution for the six month period ending December 31, 2009 will remain $0.25.
The units are listed for trading on the Toronto Stock Exchange under the symbol BND.UN.
SOURCE Investment Grade Trust
For further information: For further information: Crown Hill Capital, (416) 361-1212