According to reports in The Cover and The Covered Bond Report, Canada is considering whether to increase the 4% limit imposed on covered bond issuance. This limit was imposed by the Office of the Superintendent of Financial Institutions (OSFI) at the inception of covered bond issuance by Canadian banks in 2007 and remains unchanged today. While the limit is the most stringent currently applied in the covered bond world, Canadian banks have nevertheless been active issuers of covered bonds as can be seen by the table below.
| US$ | EUR | GBP | CHF | A$ | C$ | |
|---|---|---|---|---|---|---|
| Issued (mm)* | 71,600 | 44,037 | 4,375 | 2,075 | 7,450 | 4900 |
| Outstanding (mm)* | 39,600 | 38,613 | 4,375 | 1,400 | 5,100 | 3,300 |
Source: www.us-covered-bonds.com/cdn_issue_details
* As of January 28, 2016.
The current 4% limit is measured as the Canadian dollar equivalent amount of covered bonds outstanding divided by total assets. The table below shows the covered bond issuance capacity remaining for each Canadian covered bond issuer as of December 2015.
| BMO | BNS | CCDQ* | CIBC | NBC | RBC | TD | TOTAL | |
|---|---|---|---|---|---|---|---|---|
| Total Assets (mm)** | 641,881 | 856,497 | 1,318 | 463,309 | 216,090 | 1,074,208 | 862,532 | 4,115,835 |
| Maximum Amount (mm) | 26,100 | 33,600 | 7,400 | 18,200 | 8,300 | 43,500 | 42,400 | 179,700 |
| Outstanding Amount (mm) | 11,600 | 22,200 | 5,400 | 10,700 | 7,300 | 31,300 | 20,900 | 109,400 |
| Used Capacity | 44.3% | 66.0% | 73.1%* | 59.0% | 87.8% | 71.6% | 60.9% | 60.9% |
| Remaining Amount (mm) | 14,500 | 11,400 | 2,000 | 7,500 | 1,000 | 12,400 | 21,500 | 70,300 |
Source: CMHC, Covered Bond Business Supplement, September 2015.
*Note that CCDQ is subject to a different limit, which is set by Autorité des marchés financiers at EUR 5.0 billion.
** As of October 31, 2015.