CANADA MORTGAGE AND HOUSING CORPORATION Covered Bonds Business Supplement SECOND QUARTER June 3, 18 The Covered Bonds Business Supplement document is based on publicly available information and provides an overview of covered bond activities undertaken by Canadian financial institutions. For greater details on the requirements and policies of Canadian registered covered bonds, refer to the Canadian Registered Covered Bond Programs Guide (https://www.cmhc-schl.gc.ca/en/finance-and-investing/canadian-registered-covered-bonds/canadian-registeredcovered-bond-programs-guide)
ANNUAL ISSUANCE AND OUTSTANDING VOLUME OF COVERED BONDS The 1 amendments to the National Housing Act established a legal framework for the registration of covered bond programs in Canada. Under the Act, CMHC is responsible for maintaining a registry of covered bonds issuers and programs and acts as the administrator for the legislative covered bonds framework. Prior to 1, covered bonds issued by Canadian financial institutions were issued under structured programs without statutory protection for investors. The Government and CMHC do not provide any guarantees or backing for covered bonds, and covered bond collateral must be composed of one- to four-unit uninsured residential mortgage loans. The amount of covered bonds outstanding issued by Canadian financial institutions has increased gradually since 7. As of June 18, the amount of covered bonds outstanding issued under the legislative framework amounted to $156.3 billion and the 18 issuance amounted to $5.3 billion. Annual Issuance and Outstanding Volume of Covered Bonds Q 18 Covered Bond Issuance by Currency 18 Outstanding - Structured Outstanding - Legislative Issuance.8% 16 1 1 1 8 6 3.8% 1.8% 9.% 53.% Total = $5.3B USD EUR AUD CAD GBP CHF 7 8 9 1 11 1 13 1 15 16 17 18.% CANADA MORTGAGE AND HOUSING CORPORATION
COVERED BONDS ISSUANCE CAPACITY Canada s six largest banks (Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, Toronto-Dominion Bank) and Fédération des caisses Desjardins du Québec have registered covered bonds programs. Under federal and provincial regulatory requirements, the aggregate amount of covered bonds issued by an institution cannot exceed % of its total assets as set and calculated by the regulatory bodies. The combined regulatory covered bond limit was $8.3 billion as at June 18. At this point, all Issuers have the capacity to issue additional covered bonds. Future covered bond redemptions will also provide additional issuance capacity. As at 3 June 18 BMO BNS FCDQ CIBC NBC RBC TD TOTAL Total Covered Bonds Outstanding (C$ Equivalent).9 6.9 5.5.9 7. 37.3 33.5 156.3 Legislative Program.9 6.9 5.5.7 7. 37.3 33.5 156.1 Structured Program........ Total Regulatory Covered Bond Limit 9.5 37. 9.3 3. 9.9 8. 5. 8.3 Remaining Issuance Capacity.6 1.5 3.8..8 11. 16.7 51.9 Total Outstanding as a % of Regulatory Limit 8.% 71.8% 59.1% 9.3% 71.% 77.1% 66.6% 75.1% 36 3 3 3 8 6 18 16 1 1 1 8 6 Covered Bond Maturities Structured Legislative 36 3 3 3 8 6 18 16 1 1 1 8 6 Covered Bond Maturities BMO BNE FCDQ CIBC NBC RBC TD 18 19 1 3 5 6 7 8 9 3 31 3 33 3 35 36 18 19 1 3 5 6 7 8 9 3 31 3 33 3 35 36 3 CANADA MORTGAGE AND HOUSING CORPORATION 3
COVERED BONDS AS A SOURCE OF FUNDING Canadian lenders have continually increased their use of covered bonds as a source of funding. Covered bond funding as a percentage of the total mortgage market increased from 5% in early 13 to over 1% in 18. 1,55 Total Mortgages Outstanding 1,5 1,5 1, 1,35 1,3 1,5 1, 1,15 1,1 7. 6.5 5.3% 6.5 65. 5.9% 5.5% 5.% 11.6 85. 9.3 8.5 7.9% 76. 6.8% 7.% 71. 6.8% 6.% 5.9% 19.5 8.3% 111.7 8.3% 13.9 9.% 137.1 1% 137.5 136. 9.7% 9.7% 13.3 9.% 135.6 9.3% 156. 16.9 1.3% 137. 9.8% 138.3 9.% 9.3% Covered Bonds (structured and legislative) Other sources of Funding 1,5 1, 13 Q1 13 Q 13 Q3 13 Q 1 Q1 1 Q 1 Q3 1 Q 15 Q1 15 Q 15 Q3 15 Q 16 Q1 16 Q 16 Q3 16 Q 17 Q1 17 Q 17 Q3 17 Q 18 Q1 18 Q Sources: Bank of Canada website, Registered Issuers' websites CANADA MORTGAGE AND HOUSING CORPORATION
REVENUES AND EXPENSE FOR THE ADMINISTRATION OF THE COVERED BONDS FRAMEWORK The NHA requires that fees for the registration of covered bond issuers and programs be commensurate with the expenses incurred by CMHC in performing its duties with respect to the administration of the registered covered bond framework. The fee structure at the inception of the program was $35, for the application fee and $35, for the annual fee. The annual fee per issuer decreased from $5, to $175, in 18 and the application fee remains unchanged at $35,. CMHC will continue to monitor the fees and related expenses to ensure CMHC administers the legislative covered bond program on a cost recovery basis. Application Fee Issuer Annual Fee 18 35, 175, 17 35, 5, 16 35, 5, 13-15 35, 35, Total since inception (1 17) Q 18 Fees Earned 13,75, 1,5, Expenses Internal 6,76,78 53,7 External,986,595 Total Expenses 11,713,73 53,7 5 CANADA MORTGAGE AND HOUSING CORPORATION 5