SCOTTSDALE, Ariz. – One of the major themes that seemed to pervade the SRI conference was the desire for firms to find good alternatives to traditional asset-backed commercial paper funding (see SIV story, p.1), and in line with that concept, BMO Nesbitt Burns Managing Director Jeff Phillips announced that his company is preparing to launch a new extendable MTN program by the end of the first quarter.
“For our U.S.-based conduits, we have determined that an extendable MTN program is the best alternative to complement our traditional ABCP funding strategy,” said Ronald Kirchler, vice president at BMO Nesbitt Burns.
The MTNs are expected to be rated AAA/Aaa with maturities from one to 10 years, and will be priced primarily on a floating-rate basis with an option for fixed-rate issuance. They will also include a callability and renewal feature that mirrors what a traditional liquidity facility would look like from a renewal standpoint, Kirchler said. Initial investor feedback has been positive.
Bank of Montreal has a large securitization presence and credit investment management business in the U.S., Canada and London. The company operates two major ABCP conduits in the U.S., Pooled Accounts Receivables Capital Corp. (PAR Capital) and Fairway Finance Corp., with $6 billion in outstandings. The firm also operates seven conduits in Canada, totaling C$15 billion, as well as a structured investment vehicle (SIV) out of London, called Links, which was established in June 1999. The firm is also a manager of high-yield CBOs.