Loading ...2015-03-25 08:44 ET – In the News
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From In the News (C:BNS) Bank of Nova Scotia
The Globe and Mail reports in its Wednesday edition the collapse of a major U.S. gold miner has ensnared Bank of Nova Scotia. The Globe’s Tim Kiladze writes Allied Nevada Gold filed for creditor protection in Delaware on March. As of early February, the lender’s potential loss from a swap agreement signed with Allied Nevada in 2012 amounted to $73-million, but by one calculation, Scotiabank was at risk of losing as much as $90-million. Scotiabank’s fortunes are also tied to its ultimate ranking among bondholders: The higher it ranks, the better its claims on Allied Nevada’s assets. It could take a protracted courtroom battle to determine this hierarchy. It is one of the few high profile cases that stem from a corporate swap exposure. The downfall of Canwest Global Communications is one of the few comparable transactions. In 2012, Allied Nevada sold $400-million worth of seven-year high yield debt that paid an 8.375 per cent annual coupon. When the deal closed, the miner entered into an agreement with Scotiabank that effectively swapped its Canadian dollar proceeds for U.S. dollars. Since then, the loonie has depreciated heavily relative to the U.S. dollar, and Allied Nevada’s fortunes also deteriorated