Canaccord Capital (TSX:CCI) has thrown its support behind a restructuring proposal that would provide liquidity to ease pressure on Canada's asset-backed commercial paper (ABCP) market.
The proposal would extend over several years the lifespan of ABCP funding used against short-term assets like trade receivables that typically reaches maturity between 30 and 60 days.
Canaccord stated that it has $32 million, or roughly 9% of its cash, invested in third-party ABCP instruments, which are experiencing "limited liquidity."
The agreement from 10 Canadian and international financial institutions to restructure a segment of Canada's $116 billion ABCP market would ease pressure on third-party ABCP issuers who are having trouble raising money to pay off debt, a symptom of the fallout from the United States' ailing sub-prime mortgage market.