City gets back remaining asset backed commercial paper investment, reports $2.1M loss

LETHBRIDGE – An unfortunate investment loss to the City of Lethbridge has finally come full circle after nearly a decade.

In 2007, the City put just over $30-million in highly rated asset backed commercial paper (ABCP) investments. However, in August that same year, the Canadian market ceased for ABCP, and the Pan Canadian Investors Committee was forced to completely restructure the investments, which was complete on January 21, 2009.
 
The City received new master asset vehicle (MAV) 2 notes from that restructuring process, in November 2009. They then reached a deal with National Bank to redeem 75-per cent of the face value on $7.9-million of those notes, that were considered poor quality, for a return of $5.9-million.

On Monday (Jan. 31), city council learned the full $22.3-million value for the remaining restructured notes they held on to has now been paid back since its maturity date on January 22. Treasurer, Corey Wight, says the real outcome wasn’t as grim as the $5.7-million loss that was predicted and allowed for back in 2008.
 
“As it’s turned out, with the receipt of these funds last week, we actually only lost $2.1-million. I say only, but that’s still a significant loss,” he went on to explain.
 
“Nevertheless, it’s much less than we estimated originally, and much less than some members of the community might think that we lost. We always counted on getting a large portion of this $22.3-million back. So, it’s not new money in that respect.”

Wight explained that the full $22.3-million will be re-invested, in line with the City’s updated, much more conservative and restrictive investment policy. All money exchanges will be recorded in the 2017 financial statements.
 
Previous documents from the City of Lethbridge state that investments are used “to provide a return on public funds while they are held by the City,” and are governed under the Municipal Government Act.