Coventree Announces ABCP Market Disruption

    Toronto Stock Exchange Symbol: COF

    TORONTO, Aug. 13 /CNW/ - Coventree Inc. (TSX: COF) today announced that,
as result of the current unfavourable conditions in the Canadian asset-backed
commercial paper ("ABCP") market, it has been unable to place new ABCP to fund
the repayment of previously issued ABCP maturing today. As a result of this
market disruption, it has extended the term of extendible ABCP (also known as
E notes) in the aggregate amount of $250 million issued by all
Coventree-sponsored ABCP conduits including Apollo, Aurora, Comet, Gemini,
Planet, Rocket, Slate, SIT III and SAT. It has also issued notices requesting
funding under liquidity facilities that support the liquidity-backed ABCP
(also known as A notes) issued by all such conduits other than Apollo in the
aggregate amount of $700 million.
    In recent weeks, the market value of many investments around the world
has fallen beginning with U.S. subprime mortgage loans and related securities
and then spreading outwards. In Coventree's view, problems that initially
seemed isolated to a few U.S. subprime mortgage lenders have led to broader
concerns relating to debt capital markets generally, including the Canadian
ABCP market. Coventree believes that some investors are reducing or
eliminating their investments in the Canadian ABCP market, including ABCP
issued by conduits sponsored by companies such as Coventree. This, together
with recent large new ABCP issuances from bank-sponsored conduits, has
resulted in what Coventree believes to be an imbalance between the supply and
demand for ABCP in Canada. Initially, this imbalance resulted in a widening of
spreads generally in the Canadian ABCP market and has now resulted in today's
market disruption. Coventree believes that, with the involvement of key
industry participants, this market disruption can be addressed through steps
such as the immediate injection of liquidity into the Canadian ABCP market and
the orderly sale of assets held by ABCP conduits; however, there can be no
assurance that any such steps will be implemented or, if implemented, that
they will address the current market disruption. At this time, Coventree is
unable to predict how long the current market disruption will continue or the
extent of the impact of this market disruption on Coventree's financial
results and financial condition. The Company has A notes and E notes maturing
on a daily basis. If the market disruption continues, Coventree will have to
extend additional E Notes and make further draws on its liquidity.
    Coventree sponsors and administers asset-backed commercial paper ("ABCP")
conduits that in the aggregate have approximately $16 billion in fundings
outstanding, of which approximately $7.7 billion are A notes and $7.3 billion
are E notes. A notes are supported by liquidity facilities that are intended
to protect ABCP investors from a market disruption that prevents the
redemption and roll-over of their notes at maturity. These liquidity
facilities are typically provided by lenders who have a rating from DBRS
Limited of R-1(middle) or better. The facilities contain various conditions,
including a definition of what constitutes a market disruption, that must be
satisfied before a liquidity provider is obligated to fund under its facility.
Although Coventree has issued notices to liquidity providers under each of the
facilities referred to above for which the draw conditions have, in the
opinion of Coventree, been satisfied, there is no assurance that the liquidity
providers will fund or be obligated to fund under the requisite liquidity
agreements. If liquidity is unavailable under the terms of the relevant
facility or the liquidity providers do not fund as required under the relevant
agreements, that could lead to a default by a conduit in respect of its issued
and outstanding ABCP.
    E notes are not supported by liquidity facilities. The terms of E notes
provide for the automatic extension of the notes that, when combined with the
original term of the notes, can be up to 364 days in the event of a market
disruption. Investors are, in effect, providing the requisite liquidity and
receive a premium yield for bearing this risk. Investors receive a premium
interest rate during the extension period.

    This press release contains forward-looking statements, which are subject
to certain risks, uncertainties and assumptions. These forward looking
statements relate to, among other things, Coventree's plans, objectives,
expectations, estimates, beliefs and strategies. A number of factors could
cause actual results to differ materially from the results discussed in such
statements, and there is no assurance that actual results will be consistent
with them. Such factors include, among others, the risk factors set forth in
Coventree's Annual Information Form filed on SEDAR ( Given
these uncertainties, readers are cautioned not to place undue reliance on
these forward-looking statements. The forward-looking statements made herein
are made as at the date of this news release, and Coventree assumes no
obligation to update or revise them, either publicly or otherwise, to reflect
new events, information or circumstances, except as may be required under
applicable securities law.

    %SEDAR: 00024386E

For further information:

For further information: Bridget Child, Coventree Inc., Tel: (416)
362-2125, Email:; Craig Armitage, The Equicom Group Inc.,
Tel: (416) 815-0700 x278, Email:

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