Scrap Paper: A guide to the ABCP mess

Canada’s financial players were supposed to be safe from the sub-prime lending crisis in the U.S. In the lazy days of mid-August 2007, a Canadian-made version of the sub-prime crisis hit our financial markets to the tune of more than $30 billion in the form of asset-backed commercial paper, or ABCP.

ABCP is a short-term structured investment product made up of numerous other debt obligations, some of which were found to be highly exposed to U.S. sub-prime mortgages. Investors lost confidence in ABCP, and providers could no longer find buyers for new issues, leaving those providers with the prospect of insolvency and those holding ABCP unable to get their money back.

In August 2007, the Montreal Accord was signed by many of the country’s largest third-party ABCP providers and their lenders. The accord froze all ABCP debt and set about restructuring the products so the majority of ABCP investors and sponsors, which included some of the country’s largest banks, pension funds and corporations, could get most if not all of their money back.

Things have only become more complicated since then as accusations have flown about poor due diligence by sponsors and credit rating agencies and more than 1,500 investors have been revealed to have their savings frozen in ABCP.

Below is an index of Advisor.ca’s coverage of the ABCP mess since the story broke:

2009 / 2008 / 2007

2009

December 22: ABCP investors blast settlement, regulators

December 22: ABABCP fines total $138 million

December 18: Regulators to consider ABCP settlements

January 21: ABCP saga draws to orderly close

January 12: Judge approves ABCP plan

2008

December 31: ABCP resolution within sight

November 28: CSA extends ABCP comment period

November 26: ABCP plan misses another deadline