August 16, 2007 (LPAC)-- Coventree Incorporated, the troubled Canadian issuer of asset back commercial paper (ABCP) announced that it found a buyer for C$600 (US$560) million worth of notes that had come due. Although they refused to reveal who their benefactor was, the move gave its stock price a one day reprieve after collapsing by 80% in the previous days. According to today's Globe and Mail, the funds were most likely made available by the Caisse de Depot et Placement du Quebec, another major player in the ABCP market.

Caisse, which was founded by an act of the Canadian parliament, has as one of its major depositors the Canadian national pension fund. Caisse hosted a meeting of several major Canadian and international lenders in the hope of organizing a bailout of the C$120 billion ABCP market. The most vulnerable part of this market is the non-bank sponsored ABCP, amounting to some C$40 billion, which, unlike the bank sponsored notes, have no financial backup from banks. Caisse is believed to be the largest player in this market.

Caisse is trying to get the banks to put liquidity into the sector but many of the banks are refusing. Deutsche Bank, Barclay's and the Canadian Imperial Bank of Commerce are among those refusing to buy the paper, thus not honoring their back up agreements with the issuers of ABCP. THhe banks are claiming that any obligation for them to buy back this ABCP depends on a "general market disruption," which they are incredibly trying to claim has not occurred.

The Globe and Mail quotes on executive as saying, "The backup agreements were really just a bunch of words. The banks got big into this because they never thought they would be called."

As many as 17 trusts have been unable to refinance their ABCP this past Wednesday. It is feared that these trusts would be forced into a default if they fail to raise funding within three days after the notes come due.