Canada

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.

Toronto-Dominion Bank is setting up a Eu10bn covered bond programme that will be backed entirely by residential mortgages insured by the Canada Mortgage & Housing Corp. The move follows CIBC's similarly structured debut earlier this month, which signalled a change in direction for the Canadian covered bond market.

Toronto-Dominion Bank is said to be close to launching a covered bond programme, with a roadshow possibly taking place in the coming month. However, while TD’s programme has been expected for some time, its final shape could be different from how it had originally been envisaged.

Sparebank 1 Boligkreditt and the Swedish Covered Bond Corp showed the new realities of the covered bond market this week, taking spreads to new wides to win over investors. The Cover spoke to officials at the two institutions about the thinking behind their new issues.

CIBC priced a Eu2bn debut issue yesterday (Tuesday) afternoon, successfully tackling the difficult market to show that in spite of Dexia Kommunalbank’s failure to get its jumbo public sector Pfandbrief away on Monday, the primary market remains open.

CIBC showed that the covered bond market remains open despite investors’ apparent lack of enthusiasm for Germany public sector jumbo Pfandbriefe this (Tuesday) morning, quickly reaching oversubscription on a new issue. Encouraged by this, Sparebank 1 is entering the market this afternoon with a five year deal.

The 4% limit on covered bond issuance as a percentage of total liabilities is one of the most restrictive parts of the policy statement released by the Federal Deposit Insurance Corporation last week. The Cover spoke to the Independent Community Bankers of America about their views on the cap, and whether pooled issuance was a prospect in the US.