DBRS has today commented on the latest AAA-rated issuance (Series CB3 or the Series) from the EUR 15 billion Royal Bank of Canada Global Covered Bond Programme (the Programme):
The Series is the first covered bond issuance by a Canadian financial institution after a period of inactivity of more than one year. It has a principal amount of $750 million and is issued under the Programme and qualified for distribution in Canada under prospectus supplements filed under the Programme’s short-form base shelf prospectus dated September 23, 2009. After issuance of the Series, the total Programme outstanding amount is approximately $5.5 billion, which is supported by a collateral pool of $11.6 billion Canadian prime residential mortgages (as of September 30, 2009), representing 110% of overcollateralized assets. This percentage is well above the required minimum 7% based on the current asset percentage of 93%.
It is DBRS’s understanding that this is the first Canadian covered bond issuance purchased predominantly by Canadian investors. DBRS considers this to be a positive step for Canadian covered bonds as investors in Europe have commented to DBRS on the importance of establishing a domestic investor base for the development of a robust Canadian covered bond market.