CIBC, RBC bring Canada's first registered covered bond programs

By Angela McDaniels

Tacoma, Wash., July 3 - Canadian Imperial Bank of Commerce and Royal Bank of Canada have each registered a covered bond program, according to a news release from Canada Mortgage and Housing Corp.

These are Canada's first two registered covered bond programs. Canada Mortgage and Housing expects that other issuers will soon have registered programs in place.

Since 2007, covered bonds have been issued in Canada under a contractual framework. Under new legal framework, there is now statutory protection for covered bond investors.

Federally and provincially regulated financial institutions that meet requirements will be able to issue covered bonds under the framework. Canada Mortgage and Housing will maintain a public registry of Canadian covered bond issuers and programs.

Covered bonds are debt instruments that are issued by a financial institution and secured by a segregated pool of assets, primarily uninsured Canadian residential mortgages.

Assets that may be held as covered bond collateral include loans secured by one- to four-unit residential properties located in Canada. Insured mortgages cannot be used as covered bond collateral.

Covered bonds are not guaranteed by Canada Mortgage and Housing or the Government of Canada.

CIBC is based in Toronto, and RBC is based in Montreal.

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