Coventree, the Canadian boutique investment bank that last week fell foul of the extreme turmoil in the credit sector, has put its strategic growth plans on hold and warned market conditions will wipe out its revenues from credit arbitrage deals in the short term.

Coventree's main sources of recurring revenues are credit arbitrage transactions and traditional securitisation programme fees. The bank said in a statement that spreads on debt issued by the commercial paper conduits it sponsors have widened to such an extent that "at these spread levels, Coventree's revenues from credit arbitrage transactions will in the short term be reduced to zero".