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City to release ABCP details |
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Written by Lethbridge Herald
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Friday, 27 November 2009 |
Long-awaited details are to be released Monday regarding the city’s settlement with National Bank Financial, which sold the city $30.3 million in tainted investments in 2007.
City council members will be asked to approve the agreement when they discuss the matter at their regular meeting Monday afternoon. A settlement was originally expected as early as last February, a month after the city received longer-term notes to replace the original short-term asset-back commercial paper investments it bought in the summer of 2007.
The original ABCP was rated as a low-risk, short-term investment when the city bought it. The replacement notes don’t mature until January 2017.
The market for the complex ABCP investments froze in August 2007 due to uncertainty about the true value of underlying assets and their links to the sub-prime mortgage crisis in the United States.
Last December, while a national restructuring plan for $32 billion in the ABCP crisis was still in limbo, the city took a $5.7-million, 18-per-cent write-down on on the value of the investment. City officials maintained, however, that they expected any actual loss would be minimal.
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