Bank of Canada Announces Details of its 91 Day Term PRA Transaction

In accordance with the schedule of Term PRA auctions announced on 3 October, the Bank of Canada announced today that it will enter into a 91-day Purchase and Resale Agreement (PRA) transaction as follows:

The list of eligible securities for these transactions is the same as the list of securities permanently eligible as collateral for the Bank's Standing Liquidity Facility (SLF) available at: https://www.bankofcanada.ca/en/financial/securities.pdf. Securities from this list used in these term PRA transactions will be subject to the same margin requirements as those applicable in SLF transactions.

Bank-sponsored asset-backed commercial paper (ABCP) that has met the Bank of Canada's criteria will also be an eligible security for affiliated dealers on a temporary basis. The margin requirement for these securities will be 22.5 per cent, and will not be prorated according to the term of the security.

These term PRAs will be transacted with Primary Dealers 1 and with direct participants in the Large Value Transfer System 2. Each participant will have a bidding limit of 25 per cent of the auctioned amount and will be subject to a maximum aggregate of all outstanding Term PRAs. For participants rated A or higher, the maximum aggregate limit will be 25 per cent of the total outstanding; for participants rated either BBB or lower or those without a rating, the limit will be 12.5%. Participants will have the right to substitute the securities underlying the transaction on 20 November 2008 and on 18 December 2008, subject to notice by noon on the previous business day and in accordance with the Bank's Purchase and Resale Agreement.

An institution may offer the obligation of a single private-sector, municipal, foreign issuer or related party subject to a cumulative limit (par value) of 20 per cent of the cumulative amount of the Term PRAs outstanding with that institution. In the case of ABCP, no more than 20% of the par value of the securities offered by an institution, nor for the cumulative outstanding, should be ABCP sponsored by a single institution. No concentration limit will be applied if the amount allocated to the participant is $50 million or less.

The auction will be held on 21 October at 9:30 (ET) and the results of these operations will be announced on the Bank's web site at 10:30 (ET). The total amount of assets acquired through these term PRA operations will be announced on the Bank's web site on the settlement day by 16:45 (ET).

The Bank will continue to provide additional term liquidity as long as conditions in financial markets warrant.

For further information, please contact:
Jeremy Harrison
613 782-8782