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The office space that had been rented on the 33rd floor of 250 Yonge Street to hold all the legal documents required to implement the ABCP restructuring. Articling student Daniel Mahler with Goodmans LLP is surrounded by files as he checks his email. Pictures taken on Jan.12/09
The office space that had been rented on the 33rd floor of 250 Yonge Street to hold all the legal documents required to implement the ABCP restructuring. Articling student Daniel Mahler with Goodmans LLP is surrounded by files as he checks his email. Pictures taken on Jan.12/09
(Tibor Kolley/The Globe and Mail)

The derivatives that blew up ABCP attempt a comeback

Mention the words leveraged super senior tranche to most people and their eyes will glaze over. But to anyone who was involved in the messy Canadian asset-backed commercial paper (ABCP) crisis, the derivatives are the last thing they ever want to see again.

Yet here they are, as Euromoney reports that Citigroup Inc. is trying to sell the first leveraged super senior (LSS) tranche of a synthetic collateralized default obligation (CDO) since the crisis. Just reading that sentence should give an inkling of the complexity of the product, and in the wake of the crisis, investors shunned such credit derivatives.