Moody’s Investor Services says that it does not rate any asset-backed commercial paper conduits with market disruption clauses in their liquidity backstop agreements.

The rating agency reports that it has received a number of questions regarding the necessity of a “general market disruption” for Canadian asset-backed commercial paper programs to draw on their liquidity facilities. Moody’s noted that none of its ABCP programs globally are based on this form of liquidity support.

“This type of liquidity backstop exists only in the Canadian ABCP market, and we do not expect any similar circumstances to occur in other markets, nor with the ABCP program that we rate in Canada,” it adds.

Moody’s rated ABCP programs that have liquidity facilities, including the one it rates in Canada, have committed liquidity facilities. “We believe that in isolated cases, there have been some draws on liquidity to pay maturing ABCP notes. In those cases, liquidity providers made funds available in a timely fashion,” it says.

It adds that its bank analysts are aware of the banks’ liquidity commitments to ABCP programs and include those commitments in Moody’s rating analysis. “Moody’s believes that these firms are able to meet those commitments according to their terms,” it says.