Doubts surround Canada’s RMBS market

Author: Amélie Labbé | Published: 5 May 2017

Bank of Montreal (BMO) has become the first Canadian bank to securitise a portfolio of uninsured prime residential mortgages and Royal Bank of Canada has also hinted it could go down the same route, according to local news reports. But despite the promising signs, there are stills some initial issues to be ironed out.

Some market participants are wary about BMO’s transaction becoming a landmark in the market.  

"It comes down to the fact that some are sceptical that a triple A senior tranche could be done economically," said Mark McElheran, partner at Stikeman Elliott in Toronto.

According to a pre-sale report from Moody’s, the deal is backed by 6,364 fixed rate mortgage loans originated by BMO, with the top three tranches of the securities issued retained by the bank. Some 95% of the debt has a triple A rating while the lowest rated segment had a B2...



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