for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up
Bonds News

Canada Housing Trust issues C$12.5 bln of bonds

TORONTO, June 18 (Reuters) - A total of C$12.5 billion ($12.3 billion) of debt was issued on Wednesday under the Canada Mortgage Bond program in three tranches, setting a quarterly record, according to one of the banks involved.

The three tranches for the quarterly offering include a new 5-year benchmark bond for C$9.0 billion, a reopening of a shorter-dated 3-year issue for C$2.0 billion and a new 5-year floating rate note for C$1.5 billion. The previous record high of $11.0 billion was set in the first quarter.

The five-year issue was priced at a spread of 47 basis points over the 3.5 percent June 16, 2013, Canada government bond, while the three-year issue was priced at a spread of 39 basis points over the 3.75 percent Sept. 15, 2011, Canada bond, according to RBC Capital Markets.

The bank said the floating rate issue was at a spread 4.5 basis points below the 3-month Canadian Dollar Bankers’ Acceptance Rate rate.

The joint leads and book runners for the fixed-rate issues are RBC Capital Markets, BMO Capital Markets, Deutsche Bank, Merrill Lynch and TD Securities. While the joint leads and book runners for the floating-rate issue are TD Securities, BMO Capital Markets and RBC Capital Markets.

The bonds are offered on a global basis, and 31.5 percent of the five-year fixed bonds this quarter were snapped up outside of Canada. Sixteen percent by investors in the United States, 10 percent into Europe and about 5.5 percent into Asia, said Grant Berry, managing director, public sector, at RBC Capital Markets.

“Distribution is not only pretty impressive, but the accounts in the books are of really high quality,” he said.

Bonds issued by Canada Housing Trust under the program are rated AAA by three agencies and guaranteed by Canada Mortgage and Housing Corp, a federal government agency.

Large and small Canadian mortgage lenders use the CMB program as a funding vehicle.

A total of 25 different mortgage originators sold an estimated 64,000, 100 percent insured residential mortgages into this transaction.

In total, there is C$136 billion in various CMB issues outstanding, most of which are fixed-rate issues. ($1=$1.02 Canadian) (Reporting by John McCrank; Editing by Frank McGurty)

for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up