The federal and local authorities in Canada have been sucked into the restructuring of troubled property backed conduits, by being forced to guarantee funding, scuppering hopes that the banks and investors that have negotiating for 18 months could engineer a solution independently.

The federal government in Ottawa, as well as the regional authorities in Ontario, Quebec and Alberta, agreed over the weekend to provide at least part of the $9.5bn needed to support the property funds, which invest in property and were funded through investors in short term debt.