Bank of Canada Announces Final Details for the New Term PRA Facility for Private Sector Instruments

As part of its provision of liquidity to support the efficient functioning of the market for private-sector securities, the Bank of Canada announced on 23 February a new Term Purchase and Resale Agreement (PRA) Facility for Private Sector Instruments.

Following market consultations, some amendments to the proposed structure have been made. These amendments, related to eligible securities, apply to both the new Term PRA Facility for Private Sector Instruments and for the existing Regular Term PRA facility and are highlighted below.

The Bank will hold weekly auctions for the Term PRA Facility for Private Sector Instruments beginning the week of 16 March. Weekly auctions for all Term Liquidity (Term PRA Facility, Term PRA Facility for Private Sector Instruments and the Term Loan Facility) will continue through to at least the end of October 2009. Attached is a more detailed schedule of these operations through to the end of April.

Eligible Securities

After further consideration, the list of eligible securities for these Term PRA transactions was expanded to include Canadian-dollar denominated corporate bonds with long-term issuer credit ratings below A (low) by DBRS, A- by S&P and A3 by Moody's, so long as the minimum long-term issuer ratings are at least two of the following: BBB or higher by DBRS, BBB or higher by S& P or Baa2 or higher by Moody's.

The Bank will also accept corporate bonds that contain a non-financial call feature (i.e. a "Canada call"). This last criterion will also apply to "Securities Eligible as Collateral under the Bank of Canada's Standing Liquidity Facility".

Margin requirements for these securities will be provided on 13 March with the notice of the final details of the first operations to be auctioned under the new schedule.

The Bank is continuing the consultation process with respect to the possible inclusion of term Asset-Backed Securities (ABS).

The Terms and Conditions for the new Term PRA for Private Sector Instruments are provided and the amended Terms and Conditions for the Regular Term PRA are also available.

The Bank of Canada will continue to provide exceptional liquidity to the Canadian financial system as long as conditions warrant.

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Market participants requesting further information should contact:

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