OSFI releases Canadian covered bond liquidity bottleneck

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By Bill Thornhill
31 Mar 2020

A leading covered bond investor has reacted positively to a series of measures announced by Canada’s Office of the Superintendent of Financial Institutions’ (OSFI) which have effectively provided stable access to emergency funding, including a temporary increase in the amount of covered bonds the country's banks can issue. The move comes after a heavy spell of supply that had sparked concerns that Canadian banks were struggling for cash.

Due to the exceptional circumstances arising from Covid-19, OSFI has announced an increase in the covered bond issuance limit from 5.5% of an issuer’s assets to 10% for one year. 

The increase, which was announced on Friday, was exclusively designed for covered bonds to be retained for central bank repo ...

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