Tuesday, August 14, 2007

Canadian Credit Casualties

It seems despite my declaration that the subprime mess is not spilling over into the real economy was premature. Although we're not seeing problems in housing prices, we are now seeing problems in other areas:
...Toronto-based Coventree reported yesterday that "unfavourable conditions" in credit markets meant it could not find investors for $250-million of asset-backed loans that came due yesterday. The move knocked backed (sic) Coventree's stock price by 34 per cent.

I don't think there's anything fundamentally wrong with Coventree's holdings. According to the article, they are predominately commercial paper of the highest class. They're more a casualty of the fact that people don't want to lend their money right now, rather than some sort of actual quality problem with their debt. In my opinion anyway.

It'll be interesting to see if any other Canadian debt chefs (is this an original phrase?) are beat up. Maybe I'll drowsily open one eye to this situation.

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