Scotiabank Strategy & Financial Objectives
Canadian Legislative Covered Bonds (CMHC Registered)
Issuance Framework
Eligible Assets
Mortgage LTV Limits
• Canadian Registered Covered Bond Programs' Legal Framework (Canadian National Housing Act)
• Canadian Registered Covered Bond Programs Guide issued by Canada Mortgage and Housing Corporation (CMHC)
Uninsured loans secured by residential property
⚫LTV limit of 80%
Basis for Valuation of Mortgage Starting in July 2014, issuers are required to index the value of the property underlying mortgage loans in the
Collateral
covered pool while performing various tests
Substitute Assets
Substitute Assets Limitation
• 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
Cash Restriction
Coverage Test
Credit Enhancement
Swaps
Market Risk Reporting
• 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
• Interest rate swap, forward starting
• Valuation calculation
Mandatory property value indexation
Covered Bond Supervisory Body • CMHC
Requirement to Register Issuer
and Program
Registry
Disclosure Requirements
• Yes; prior to first issuance of the covered bond program
• Yes
• Monthly investor report with prescribed disclosure requirements set out by CMHC
• Investor reports must be posted on a program website
• Required to meet disclosure requirements in the jurisdictions in which the program is registered (US) or listed (UK)
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