Canada

Standard & Poor’s yesterday (Monday) affirmed a further five covered programmes at AAA under its new covered bond rating methodology, taking the number of programmes that have kept their top rating to 11.

Canadian Imperial Bank of Commerce is in the market today (Tuesday) with the first non-domestic currency Canadian covered bond of the year, a debut, two tranche Swiss franc issue.

Royal Bank of Canada last week demonstrated that there is domestic support for the covered bond product by pricing the first Canadian dollar denominated covered bond launched by a Canadian bank. Such evidence of a domestic investor base should serve to strengthen future covered bond offerings by RBC and its peers in other markets, and may attract international issuers to the Canadian market, bankers told The Cover.

Royal Bank of Canada yesterday (Thursday) became the first Canadian bank to sell a Canadian dollar denominated covered bond when it priced a C$750m five year issue. The transaction has left covered bond bankers in Europe puzzling over RBC’s rationale for the initiative, citing pricing that offered limited savings compared to senior unsecured debt.

Moody’s yesterday (Thursday) placed on review for possible downgrade the long term ratings of Bank of Montreal, citing pressure on the issuer’s profitability.

Moody’s yesterday (Monday) changed the rating outlook on Bank of Montreal from stable to negative.

The Office of the Superintendent of Financial Institutions Canada gave measured encouragement to proponents of a legislation framework for Canadian covered bonds at a conference in Toronto yesterday (Wednesday).

The Canadian Bankers Association (CBA) earlier this month submitted a proposal for a covered bond legislative framework to the Canadian government.

In this roundtable, representatives of Canada's leading banks exchanged their views on the prospects for covered bonds in the country, and on how Canada’s economy, banking sector and mortgage market are very different from those of its neighbour.

Danske Bank launched the first government-guaranteed deal for a Danish bank this (Wednesday) morning. Bayerische Landesbank opened books on a SoFFin-backed deal, while unguaranteed senior supply has reached new areas.

Canada’s credit unions are setting up a covered bond programme that will take the multi-seller model developed in Europe to the North American marketplace. The project already has provisional regulatory approval and an advisor has been appointed.

Important differences between Canada and the US in terms of their mortgage markets and economies mean that Canadian banks should be seen as strong names in the covered bond market, said speakers at IMN’s Covered Bonds – The Americas conference in Hollywood, Florida on Tuesday. But they said that although Canada’s market has developed more quickly than that of its neighbour south of the border, it needs a North American investor base if it is going to be able to progress.