Canadian Banking and Residential Mortgages Overview
Canadian Legislative Covered Bonds
(CMHC Registered)
.
Canadian Registered Covered Bond Programs' Legal Framework (Canadian National Housing Act)
Issuance Framework
•
Canadian Registered Covered Bond Programs Guide issued by Canada Mortgage and Housing
Corporation (CMHC)
Eligible Assets
Mortgage LTV Limits
•
Uninsured loans secured by residential property in Canada
•
LTV limit of 80%
Basis for Valuation of Mortgage Collateral
.
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
.
Substitute Assets
•
Substitute Assets Limitation
Cash Restriction
•
Coverage Test
Asset coverage Test
•
Credit Enhancement
•
Swaps
•
Market Risk Reporting
Covered Bond Supervisory Body
Requirement to Register Issuer and Program
Amortization Test
Overcollateralization
Reserve Fund
Covered bond swap, forward starting
Interest rate swap, forward starting
Valuation calculation
Mandatory property value indexation
•
CMHC
• Yes; prior to first issuance of the covered bond program
Registry
•
Yes
Disclosure Requirements
•
Monthly investor report with prescribed disclosure requirements set out by CMHC
Investor reports must be posted on the program website
78View entire presentation