By Lynne Olver

TORONTO (Reuters) - Bank of Montreal's (BMO.TO: Quote, Profile, Research) deal to restructure two of its commercial paper trusts eases the likelihood that it will have to issue equity in the near term, a concern that had been weighing on the bank's stock in recent weeks, analysts said on Thursday.

After markets closed on Wednesday, BMO said key counterparties and investors had agreed to restructure two asset-backed commercial paper trusts, known as Apex and Sitka, that had been sponsored by the bank. The ABCP trusts had failed to place new paper last month and were unable to meet collateral calls.

Stakeholders agreed to extend the terms of the trust notes, and BMO said it did not expect to write down any more of its C$495 million investment in the trusts. It also said it viewed the credit risk of the swaps contained in the two trusts as low.

But credit quality was never an issue, said Darko Mihelic, an analyst at CIBC World Markets.

"We note credit did not cause the problem in the first place, liquidity and a margin call is what froze the trust paper," Mihelic said in a research note.

Still, the development should help to alleviate concern over the potential for an immediate equity issue, Mihelic said, although he added that the bank may have only delayed losses related to the trusts.

RBC Capital Markets analyst Andre-Philippe Hardy also said the bank could suffer greater losses "down the road" if BBB-rated bond defaults were to surge to record levels.

BMO's investment in the Apex and Sitka trust notes rose to C$815 million, from the C$495 million previously disclosed.