OTTAWA, ONTARIO--(Marketwired - July 3, 2013) - Canada Mortgage and Housing Corporation (CMHC) announced today the registration of two covered bond programs under the legal framework for Canadian covered bonds. The Canadian Imperial Bank of Commerce (CIBC) and the Royal Bank of Canada (RBC) have the first registered programs.

The framework will support financial stability by helping lenders further diversify their sources of funding and by attracting more international investors to the market for Canadian covered bonds, making the market for covered bonds more robust.

"Having met the requirements of the program, CIBC and RBC are now in a position to issue the first covered bonds under the framework," said Douglas Stewart, Interim President and CEO, CMHC. "We expect that other issuers will soon have registered programs in place."

As the Minister of Finance committed to in Budget 2012, amendments were made to the National Housing Act (NHA) giving CMHC responsibility for administering a legal framework for covered bonds. The parameters of the legal framework are outlined in the Canadian Registered Covered Bond Programs Guide.

Federally and provincially regulated financial institutions that meet the requirements of the program will be able to issue covered bonds under the framework. CMHC will maintain a public registry of Canadian covered bond issuers and programs.

Assets that may be held as covered bond collateral include loans secured by one- to four-unit residential properties located in Canada. Insured mortgages are not permitted to be used as covered bond collateral, and covered bond issues are not guaranteed by CMHC or the Government of Canada.

For more information about covered bonds and the legal framework, please consult the attached Backgrounder.

This release is also available at For more information, visit or call 1-800-668-2642.

Follow CMHC on Twitter @CMHC_CA


As noted in the 2012 Federal Budget, CMHC administers a legal framework for covered bonds.

What is a covered bond?

Covered bonds are debt instruments that are issued by a financial institution and secured by a segregated pool of high quality assets (the "cover assets"), primarily uninsured Canadian residential mortgages. The issuer of a covered bond pays periodic interest and principal on the bond to investors, in accordance with terms that are set upon issuance.

A Registered Covered Bond is a bond that is issued under a Covered Bond Program that has been registered by CMHC pursuant to the National Housing Act (NHA). In order to be registered, an issuer must comply with all of the requirements in the Canadian Registered Covered Bond Programs Guide which is available on the CMHC website.

Issuers of registered covered bonds will benefit from being able to reach a broader investor base as some international investors are restricted from purchasing bonds issued under a non-legislative framework. Issuers will also benefit from gaining access to an alternative source of funding.

The Legal Framework

In administering the legal framework for covered bonds, CMHC will maintain and make available to the public a registry containing:

  • the names and addresses of registered issuers and registered programs, including information relating to those programs;
  • a list of registered issuers whose right to issue is suspended and the reasons for the suspension; and
  • any other information that in the Corporation's opinion is necessary.

CMHC has established fees for costs incurred to develop and maintain the program which will operate on a cost recovery basis. The Government and CMHC do not provide any guarantees or backing for covered bond issues. CMHC's role in administrating the legal framework for covered bonds is separate and distinct from its securitization activities.

The legal framework applies to any registered cover bond issuer based in Canada. Canadian registered covered bonds can be issued in different currencies and can be sold to both Canadian and international investors.

A Brief History of Canadian Covered Bonds

Since 2007, covered bonds have been issued in Canada under a contractual framework. Assurance that the assets in the cover pool would be used for the benefit of investors had been provided through the prospectus.

Under the new legal framework, there is now statutory protection for the covered bond investor. This results in increased certainty for investors with respect to the continuity of payment and the recovery of their investment in the event of issuer default.

In 2007, the Office of the Superintendent of Financial Institutions (OSFI) issued guidance permitting Canadian covered bond issuance provided that the aggregate amount issued by any deposit-taking financial institution did not exceed 4% of its total assets.

Contact Information:

Charles Sauriol, Media Relations
(613) 748-2799