WSJ: CIBC USD Covered Bond "Pioneering and Successful"

Last week's landmark issuance of $2 billion in U.S. dollar-denominated covered bonds by Canadian Imperial Bank of Commerce (CIBC) spurred a flurry of postive media comments as to what this may indicate for a possible future U.S. covered bond market.

A sample:

• Men Zing of the Wall Street Journal called CIBC's move "pioneering and successful" (Jan. 29).  He noted that the issuance has raised new hopes for the future of covered bonds in the U.S. — while acknowledging that "unresolved concerns of both U.S. investors and issuers may stymie issuance for a while longer."

• Andrew Willis of the Globe and Mail took the CIBC covered bond's success as evidence that "U.S. credit markets are developing an appetite for this low-risk debt" (Jan. 28).

• For Diana Golobay of HousingWire, the issuance was "the latest indication of the growing momentum for US dollar-denominated covered bonds" (Jan. 27).

Still, the optimistic view was not universal.  For example, a post in CFO Zone took the view that "MBS clearly has more appeal to investors than covered bonds" (Jan. 28).  One of the author's points is that the balance sheets of many U.S. banks are in much worse shape than their Canadian counterparts.  In light of this, she asks: "[W]hy would investors buy covered bonds from U.S. banks anyway?"

Related:

• CIBC Prices USD $2 Billion Covered Bond

• CIBC $USD $2 Billion Covered Bond "Final Terms"