Canadian Housing Market Financial Analysis
Canadian Legislative Covered Bonds (CMHC Registered)
•
Canadian Registered Covered Bond Programs' Legal Framework (Canadian National Housing Act)
Issuance Framework
Eligible Assets
Mortgage LTV Limits
Basis for Valuation of Mortgage Collateral
Substitute Assets
Substitute Assets Limitation
.
•
Cash Restriction
Coverage Test
•
.
Credit Enhancement
•
•
Canadian Registered Covered Bond Programs Guide issued by Canada Mortgage and Housing
Corporation (CMHC)
Uninsured loans secured by residential property in Canada
LTV limit of 80%
Issuers are required to index the value of the property
underlying mortgage loans in the covered pool while performing various tests
Securities issued by the Government of Canada
Repos of Government of Canada securities having terms acceptable to CMHC
10% of the aggregate value of (a) the loans (b) any Substitute Assets and (c) all cash held
by the Guarantor
The cash assets of the Guarantor cannot exceed the Guarantor's payment obligations
for the immediately succeeding six months
Asset coverage Test
Amortization Test
Overcollateralization
Reserve Fund
Prematurity Liquidity
Covered bond swap, forward starting
Swaps
.
Interest rate swap, forward starting
Valuation calculation
Market Risk Reporting
•
Mandatory property value indexation
•
CMHC
Covered Bond Supervisory Body
Requirement to Register Issuer and Program
Registry
• Yes; prior to first issuance of the covered bond program
Yes
Disclosure Requirements
•
Monthly investor report with prescribed disclosure requirements set out by CMHC
Investor reports must be posted on the program website
Required to meet applicable regulatory disclosure requirements
Scotiabank®
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