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

In light of persistent pressures in term lending markets, the Bank of Canada announced today that it will enter into a 91-day Purchase and Resale Agreement (PRA) transaction as follows:

*This term PRA was announced 3 October as part of the Bank's schedule of future term PRA transactions.

The list of eligible securities for these transactions will be the same as the full list of securities eligible as collateral for the Bank's Standing Liquidity Facility (SLF): 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%, and will not be prorated according to the term of the security.

Given the broadening of the list of securities eligible for these operations and the increased amounts outstanding, concentration limits will apply. An institution may offer the obligation of a single private-sector, municipal, foreign issuer or related party subject to a cumulative limit of 20% 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.

These term PRAs will be transacted with Primary Dealers (PDs). 1 Each PD will have a bidding limit of 25% of the auctioned amount and will be subject to a maximum aggregate of all outstanding Term PRAs. For PDs rated A or higher, the maximum aggregate limit will be 25% of the total outstanding; for PDs rated either BBB or lower or those without a rating, the limit will be 12.5%. PDs will have the right to substitute the securities underlying the transaction on 6 November 2008 and on 4 December 2008, subject to notice by noon on the previous business day and in accordance with the Bank's Purchase and Resale Agreement.

The auction will be held on 7 October at 9:00 (ET) and the results of these operations will be announced on the Bank's web site at 10:00 (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:
Jill Vardy
613 782-8782