by Boyd Erman
The asset-backed commercial paper market is opening up, as detailed in Wednesday's Globe (read it here), so much so that miner New Gold (NGD) reports that it gets constant calls from potential buyers looking to take the $155-million in paper the company has.
"We've been fortunate to be patient and to hold our investment in asset-backed commercial paper as interest and liquidity is continuing to improve," said Brian Penny, New Gold's chief financial officer. "We have six potential buyers in contact with us bidding daily in some cases, weekly in other cases, to buy some or all of our asset-backed commercial paper investments."
This is music to the ears of all the other corporate and pension plan holders out there who didn't get bought out at par, as most individual investors did. Instead, they were given new paper as part of the restructuring of the $32-billion ABCP sector that closed in January, and had to put their faith in assurances from the Purdy Crawford-led restructuring committee that the paper would eventually be saleable. Those pledges are beginning to come true.
Some of the prices are also pretty surprising.
New Gold recently sold one of its so-called tracking notes, which were designed to mimic the performance of some of the worst assets, for almost 73 cents on the dollar, Mr. Penny said.
Traders said that's a bit of an outlier, because there's a specific bonus in those notes, while most of the paper is not trading at nearly that level. Mr. Penny said he's willing to be patient with the rest of his ABCP.
"It's our assumption that as time passes and we get closer to 2015 they will continue to become more valuable," he said.