UPDATE 6-Canada money managers eye plan to ease ABCP crunch

(Adds new details from Coventree)

By Nicole Mordant and Janet Guttsman

VANCOUVER/TORONTO, Aug 16 (Reuters) - Ten financial institutions agreed to a plan on Thursday to try to ease a credit crunch in a segment of Canada's C$116 billion ($108 billion) asset-backed commercial paper (ABCP) market.

The players, which include Canada's biggest pension fund group and six international banks, said they were confident of support from investors holding at least two-thirds of Canada's third-party asset-backed commercial paper.

They expected others to sign on to the proposal to convert ABCP, which is short-term debt mostly with maturities of between 30 and 60 days, into longer-term floating rate notes, meaning issuers who have struggled to get funding will be off the hook for now.

Canada's finance minister, the Bank of Canada and several commercial paper trusts hit by the credit squeeze, including MMAI-I Trust, welcomed the plan.

Several third-party issuers of ABCP, traditionally regarded as a safe investment because it is backed by assets like home and car loans, have warned this week of trouble raising money to repay debt that is maturing. They had asked banks for funding lifelines, but several have refused.

"At the very least (the plan) will inject some much needed calm in the Canadian money market," said Doug Porter, deputy chief economist at BMO Capital Markets.