DBRS Releases March Monthly Canadian Covered Bond Report

DBRS has today released the Monthly Canadian Covered Bond Report, which provides an overview of the Canadian covered bond market for the month ending March 31, 2012. The report provides detailed information on this debt market, which was previously included in the Monthly Canadian ABS Report.

There were five new issuances in the month of March: Caisse centrale Desjardins du Québec issued a USD 1.5 billion note, Toronto-Dominion Bank issued a USD 3 billion note and Bank of Nova Scotia issued USD 3 billion within three series of notes. There have been nine new issuances in 2012, bringing total new issuance in the first three months of the year to $12.8 billion (Canadian-dollar equivalent). As of March 31, 2012, the total amount outstanding in the market was $63.2 billion (Canadian-dollar equivalent), an increase of 13.4% month over month. There were no changes in asset percentage for any programmes.

Active issuance in March 2012 is probably preemptive due to the potential exclusion of Canada Mortgage & Housing Corp. (CMHC) insured loans from cover pools going forward. This could have implications as financial institutions will have to rely on uninsured or privately insured mortgages for new issuance.

The U.S. debt markets remain an important source of funding for Canadian financial institutions. In 2011, there were a total of 12 new U.S. dollar issuances, accounting for $21.7 billion (Canadian-dollar equivalent). With eight new U.S. dollar issuances in 2012, total U.S. dollar issuances outstanding reached $49.6 billion (Canadian-dollar equivalent) or 78.5% of covered bonds outstanding.