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