News & Analysis: trading and investing

With a successful $1.5 billion covered bond from Royal Bank of Canada (RBC) coming hard on the heels of a landmark $2 billion issue from Canadian Imperial Bank of Canada (CIBC), Canada is currently the only game in town for U.S. dollar-denominated covered bonds.

The Royal Bank of Canada (RBC) made headlines when it became the first Canadian bank to sell covered bonds denominated in Canadian dollars (Oct. 29).  In contrast to earlier series, which were pitched towards Europe, fully 99% of this issuance was purchased within Canada.

RBC's Ken Mason, Senior Manager, Capital and Term Funding, answered some written questions from Covered Bond Investor™ as follows:

Why and when did RBC start thinking about issuing a new covered bond?  

In late July of this year, Covered Bond Investor™ briefly noted the fact that a French covered bond issuer, CFF (Compagnie de Financement Foncier) had applied to the Securities and Exchange Commission (SEC) for an order exempting CFF from provisions of the (U.S.) Investment Act of 1940 in connection with the offer and sale of its securities in the U.S.

A notice in the Federal Register (July 28) stated:

Germany's Eurohypo and Spain's Banesto price jumbo covered bond issuances ... Moody's looks at a proposal for covered bond legislation in Australia ... UBS plans to become a covered bond issuer ... and more.

Some items of covered bond news do not rate their own story in this publication—often because they relate to geographic areas outside our focus, North America.  Even so, readers who want to keep up with covered bond news in general might find them interesting.