Investors in restructured debt that emerged from the collapse of C$32 billion ($31 billion) of Canadian asset-backed commercial paper in 2007 now have the chance to redeem their notes before maturity.
A process that gives investors the option of early redemption of the securities is now in place, Moelis & Co. said in a statement today. Moelis, the New York-based investment bank founded by Kenneth Moelis, had been advising a group of institutional investors pushing to unwind the debt since March 2011. The first redemptions will begin by Oct. 31.
Canada’s market for non-bank administered ABCP collapsed in August 2007 on concern that part of the debt was backed by risky U.S. subprime mortgages. More than 100 companies and about 1,765 individuals were stuck with paper that couldn’t trade until a court-ordered plan to convert the debt into longer-term notes was completed 17 months later. Most of those notes mature in January 2017.
Companies today are being offered more than 89.5 cents on the dollar for the highest-rated notes that came out of the January 2009 restructuring, according to Colin Kilgour, whose Toronto-based Kilgour Williams Group advises holders of the debt. That’s up from about 74 cents for the Master Asset Vehicle A1 notes 18 months ago, and more than double the first trades in 2009, he said.
“We would expect to see prices jump on successful completion of the redemption initiative,” Kilgour said in a telephone interview.
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