Volatility and scrutiny cited for Canada ABCP delay

By Lynne Olver

TORONTO (Reuters) - Market volatility has helped to delay the overhaul of Canada's nonbank asset-backed commercial paper market by a month, but the restructuring should be complete by the end of November, the committee of large investors driving the process said on Monday.

Volatility in global markets, the large number of participants involved, and documentation details are all causing the restructuring to take longer than expected, the committee said.

Concerns related to market volatility have distracted and slowed down some of the participants, and most of them have also become more risk-averse, said Purdy Crawford, a senior corporate lawyer acting as chairman of the committee.

"They're looking at our documentation more carefully than they otherwise might," Crawford told Reuters.

"That takes time to work your way through, unfortunately and I'm frustrated about that. I'm sure we'll close, but I'm embarrassed about the delay."

In September, the Supreme Court of Canada declined to hear a legal challenge to the proposed market restructuring, and the investors' committee had planned to complete the complex fix-it plan by the end of October.

The restructuring covers short-term debt securities that were worth C$32 billion before concerns over U.S. credit quality caused a market spasm in August 2007.

The plan is designed to enable investors to eventually recover their money through special reimbursement programs, or by holding or selling the new restructured notes they will receive.