O&Y’s $C15bn debt mountain was sourced from banks world-wide, but a hard core of mostly Canadian and US financiers provided the bulk of the money. Chief among these are Canadian Imperial Bank of Commerce ($C700m), Royal Bank of Canada $C700m), Bank of Montreal ($C450m) and Bank of Nova Scotia ($C400m). Altogether, Canadian banks are believed to have loaned some $C2.5 to $C3bn to the developer. Major US lenders include Chemical Bank and Citicorp, who together account for about $700m.
Most of the North American O&Y debt is non-recourse and secured against prime real estate assets in New York and Toronto. Although these buildings have suffered from the property downturn, commentators believe that rents continue to cover interest in most cases.
The bulk of the UK-based borrowing involves an interim £500m loan facility provided by Barclays and Lloyds banks and syndicated to eight other North American banks. Efforts to refinance the Canary Wharf complex during the past year have been stymied by concerns over O&Y’s trouble in the US and Canadian commercial paper markets, when lower credit ratings scared off investors.
The same fears have affected efforts to arrange a securitisation of the $240m Morgan Stanley offices at Canary Wharf. Earlier last year O&Y faced a crisis when a $550m loan to Sanwa came up for renewal; the Japanese wanted out and O&Y was able to make a partial payment of only $200m.
Other lenders believed to have a stake in the restructuring are Sumitomo Trust, Dai Ichi Kangyo, ABN Amro, J P Morgan, Credit Suisse, Credit Lyonnais, National Bank of Canada and Hongkong & Shanghai Bank.
