All is Not Well in the World

Look no further than this tidbit to see that all is not well in the world. Key takeaway: investors don't trust GMAC (or GM for that matter). Or at least not at the price of this deal. Which means that the Canadian government is effectively giving an interest rate subsidy to GM, knowing that businesses will always take the low cost route. Why the auto industry has adopted this "protected status" is another issue. Let's just hope these assets don't implode on BDC's balance sheet.

the Business Development Bank of Canada, an entity owned by the federal government, completed the purchase of $1.263-billion in auto loan receivables-backed notes from GMAC Canada under the so-called Canadian Secured Credit Facility (CSCF) program. That $12-billion program, which is slated to close at the end of March, was set up last year by the federal government in response to the global financial crisis and the resulting drying up of liquidity. The BDC, which is the administrative agent under the CSCF, was the sole buyer of the securities, which yielded 2.716% and whose so-called final scheduled distribution date is May 2016. This deal is the second by BDC.

Read more: http://www.financialpost.com/opinion/story.html?id=bafcadde-d026-4627-abaf-437c6dccc493#ixzz0dk0jHxOD
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