BMO Financial Group has restructured its Apex and Sitka commercial paper trusts, and will provide $850 million of a $1.15 billion senior financing line to keep the funds afloat.

“We are very pleased with the agreement to restructure. This was a complex deal that was achieved through the efforts of both the investors and the swap counterparties,” said Tom Milroy, CEO at BMO Capital Markets, in a release.

“Based on BMO’s own evaluation of the credit quality of the approximately 450 obligations and after incorporating the benefit of the substantial first-loss protection, we consider the risk of credit loss to BMO to be low.”

The trusts’ highly leveraged underlying assets are described as exposures to high-quality corporate debt through collateralized debt obligations, a part of the financial sector that has come under pressure in recent months in the wake of the subprime mortgage situation in the United States and the subsequent fallout that has roiled credit markets.

The bank will have $815 million invested in the trusts after the restructuring, and $850 million in the senior funding facility.

The bank added that the assumption of no further writedowns depends on the finalization of the agreement and that credit losses in the trusts will be as low as expected.

BMO also said it wouldn’t protect noteholders from risk related to the actual credit losses.

As well. the restructuring includes resolution of the two commercial disputes related to the trusts previously disclosed by BMO, the bank said.

The agreement relies on definitive documentation and other conditions such as investor approval.