ABCP restructure suffers growing pains

Last week, the Yukon received only a tiny fraction of the interest payment it was supposed to get from its controversial investment of $36.5 million in asset-backed commercial paper. The territory was entitled to $39,700.

Last week, the Yukon received only a tiny fraction of the interest payment it was supposed to get from its controversial investment of $36.5 million in asset-backed commercial paper.

The territory was entitled to $39,700. It received $1,205.

But the rest of the money should be paid soon, said Clarke LaPrairie, assistant deputy minister of finance.

He’s hopeful the outstanding money will be tacked on to the next payment, due in July, for $423,000.

The government has already received $1.1 million in interest on the investment, made in 2007.

The investments in repackaged consumer debt was supposed to earn Yukon $200,000 in just 30 days. Then the credit markets collapsed in August 2007.

Since then, Yukon and other investors have crafted a restructuring deal to turn the short-term investments into longer-term ones.

But the new trust set up to handle the ABCP investments is facing a cash crunch. It needs to pay legal and administrative fees racked up during its creation.

Historically low interest rates have also hurt returns on the underlying investments.

And high bank fees are to blame, too, according to some analysts.

But once one-time costs are paid, the trust should begin to accrue more money and make bigger payments, said LaPrairie.

Most of Yukon’s $36.5 million won’t be freed up anytime soon. Eighty per cent of the new investments mature in January of 2017. The remaining 20 per cent mature in 2013.

Whether the territory receives all this money, or not, depends on the health of credit markets in the next four to eight years.

The territorial government has so far written down $6 million of this investment from its books. But that doesn’t mean they don’t expect to see all the money, said LaPrairie.

“It’s not reflective of what we expect to be paid in the future. It’s—if there was a market—what would be the market price?”

It’s possible not all the money will be paid back. But, in such a worst-case scenario, in which the credit markets are still a mess eight years from now, “we’d probably have bigger problems, because the world would be a worse place than it is today,” said LaPrairie.

Contact John Thompson at

johnt@yukon-news.com.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Fines for contravening the fire ban start at $1,150 and could go as high as $100,000. File photo
Yukon campgrounds will open on May 1 this year. (Black Press file)
Yukon campgrounds to open early

Yukon campgrounds will open on May 1 this year. The early opening… Continue reading

Yukonomist Keith Halliday
Yukonomist: The aesthetics and economics of highway strips

One of the many cultural experiences you enjoy while driving from Whitehorse… Continue reading

Submitted
Artwork by Grade 2 student Faith showing her thanks for everyone.
Artwork by Grade 2 student Faith showing her thanks for everyone. (Submitted)
Yukon kids express gratitude for nature, pets and friends in art campaign

More than 50 children submitted artwork featuring things they are grateful for

Team Yukon skip Laura Eby, left, directs her team as Team Northern Ontario skip Krysta Burns looks on at the Scotties Tournament of Hearts in Calgary on Feb. 22. (Jeff McIntosh/CP)
Team Yukon reports positive experience at Scotties

Team Yukon played their final game at the national championship in Calgary on Thursday afternoon

A sign indicating a drop-off area behind Selkirk Elementary school in Whitehorse on Feb. 25. (Haley Ritchie/Yukon News)
Parking lot proposal for Selkirk Elementary criticized

Parents and school council are raising concerns about green space and traffic woes

Tom Ullyett, pictured, is the first Yukoner to receive the Louis St-Laurent Award of Excellence from the Canadian Bar Association for his work as a community builder and mentor in the territory. (Gabrielle Plonka/Yukon News)
Tom Ullyett wins lifetime achievement award from the Canadian Bar Association

Ullyett has worked in the Yukon’s justice ecosystem for 36 years as a public sector lawyer and mentor

The Blood Ties outreach van will now run seven nights a week, thanks to a boost in government funding. Logan Godin, coordinator, and Jesse Whelen, harm reduction counsellor, are seen here on May 12, 2020. (Crystal Schick/Yukon News file)
Blood Ties outreach van running seven nights a week with funding boost

The Yukon government is ramping up overdose response, considering safe supply plan

Ranj Pillai speaks to media about business relief programs in Whitehorse on April 1, 2020. The Yukon government announced Feb.25 that it will extend business support programs until September. (Crystal Schick/Yukon News)
Government extends business relief programs to September, launches new loan

“It really gives folks some help with supporting their business with cash flow.”

Whitehorse City Hall. (Joel Krahn/Yukon News file)
A look at decisions made by Whitehorse City Council this week

Bylaw amendment Whitehorse city council is moving closer with changes to a… Continue reading

Susie Rogan is a veteran musher with 14 years of racing experience and Yukon Journey organizer. (Yukon Journey Facebook)
Yukon Journey mushers begin 255-mile race

Eleven mushers are participating in the race from Pelly Crossing to Whitehorse

Legislative assembly on the last day of the fall sitting in Whitehorse on Nov. 22, 2018. As the legislature prepares to return on March 4, the three parties are continuing to finalize candidates in the territory’s 19 ridings. (Crystal Schick/Yukon News file)
Nine new candidates confirmed in Yukon ridings

It has been a busy two weeks as the parties try to firm up candidates

David Malcolm, 40, has been charged with assaulting and attempting to disarm a police officer after an incident in Whitehorse on Feb. 18. (Phil McLachlan/Capital News)
Man resists arrest, assaults officer

A Whitehorse man has been charged with assaulting and attempting to disarm… Continue reading

Yukon Energy in Whitehorse on Aug. 4, 2020. A site on Robert Service Way near the Alaska Highway has been selected as the future home of Yukon Energy’s energy storage project. (Crystal Schick/Yukon News file)
Site selected for Yukon Energy battery project

Planned to be in service by the end of 2022

Most Read