DBRS Rates Canada Housing Trust™ No.1 Series 26 Notes at AAA

DBRS has today assigned a rating of AAA to the Fixed Rate Canada Mortgage Bonds™ Series 26 (the Bonds) issued by Canada Housing Trust™ No.1 (the Trust). The Bonds have been issued in an aggregate principal amount of $7,000,000,000 and will mature on March 15, 2014 (the Final Maturity Date). The current issuance of Bonds represents the twenty-sixth series of bonds issued by the Trust since it was established on April 9, 2001. Interest on the Bonds will be paid semi-annually in arrears on March 15 and September 15 at a rate equal to 2.20%. As the Bonds are bullet maturity bonds, principal will become due and payable on the Final Maturity Date.

The Bonds are backed by a full guarantee (the CMHC Guarantee) provided by the Canada Mortgage Housing Corporation (CMHC), in its capacity as Agent for Her Majesty in Right of Canada. The Bonds are consequently rated at the same level as CMHC’s senior unsecured debt rating of AAA, which mirrors DBRS’s Canadian sovereign rating of AAA for the Government of Canada’s domestic and foreign currency obligations. As an Agent of Her Majesty in Right of Canada, CMHC’s debt obligations and guarantees are direct obligations of the Government of Canada.

The proceeds from the issuance of the Bonds will be used by the Trust to acquire insured residential mortgages in the form of pools of mortgage-backed securities that have been created by CMHC-approved lenders (the Approved Lenders), and that meet certain eligibility criteria (the Trust Assets). The Approved Lenders will collect monthly payments from mortgagors and forward them to the Trust, which will then use the cash flows from these high-quality Trust Assets, as well as hedging agreements, to meet its obligations to Bondholders. All hedging counterparties must be approved by CMHC. The CMHC Guarantee will ensure timely payment to Bondholders to the extent that the Trust has insufficient funds to meet its expenses. As a result, the Trust has granted CMHC a first-priority security interest in the Trust Assets to the extent of any payments made to Bondholders under the CMHC Guarantee.

Notes:
All figures are in Canadian dollars unless otherwise noted.

Factors considered by DBRS in determining this rating include:
-- The applicability of the CMHC Guarantee.
-- CMHC’s status as an Agent of Her Majesty in Right of Canada.
-- The applicable methodology in rating the Government of Canada is Rating Sovereign Governments, which can be found on our website under Methodologies.

This is a Structured Finance rating.