Leading Bank in the Americas Presentation
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
•
Uninsured loans secured by residential property in Canada
Mortgage LTV Limits
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LTV limit of 80%
Basis for Valuation of Mortgage Collateral
•
Substitute Assets
•
Substitute Assets Limitation
.
•
Cash Restriction
Coverage Test
•
Credit Enhancement
•
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
Covered bond swap, forward starting
Interest rate swap, forward starting
Valuation calculation
Swaps
Market Risk Reporting
•
Mandatory property value indexation
Covered Bond Supervisory Body
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CMHC
Requirement to Register Issuer and Program
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Yes; prior to first issuance of the covered bond program
Registry
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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
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