Canada’s third-party asset-backed commercial paper (ABCP) saga is drawing to a close. While investors wait to receive money or new notes, many are taking a hard look at the decisions that have brought them to this point.
The Quebec government is asking how the Caisse de dépôt et placement du Québec managed to sink $12.7 billion of Quebecers’ savings into ABC P without understanding what they were buying. The Caisse will reveal the scope of its ABCP-related losses at the end of February in its annual report.
“I’m not thrilled with what is going on at the Caisse,” says Quebec’s Finance Minister, Monique Jérôme-Forget. “It is clear that they were fooled by this product and that they didn’t understand it.”
While retail investors started receiving interest payments on their investments in late January, institutional investors must exercise patience with their new notes, which are expected to take nine years to mature. Although they’re frustrated, some noteholders agree that it could have been worse.
“It’s the best result under the circumstances,” says Martin Belanger, associate director of retirement plans with The University of Western Ontario’s Joint Pension Board. He says the lesson here is to be aware of what you invest in, but the university is more focused on manager oversight.
“We didn’t directly invest in ABCP,” he says. “It was done on our behalf by a money manager. But maybe we could have even tighter monitoring of our managers to make sure they have all the resources in place to make the right decisions [for us].”
Pension plans like Belanger’s can at least take comfort in their long time horizon, compared to other ABCP investors who were looking to turn a quick profit at the cusp of the credit crisis.
Jody White is Associate Editor of BenefitsCanada.com
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© Copyright 2009 Rogers Publishing Ltd. This article first appeared in the February 2009 edition of BENEFITS CANADA magazine.