Canada mortgage bond sales fell 16 percent this year

Canada mortgage bond sales fell 16 percent this year and may be changed slightly in 2011 as the country's courts, the agency's housing supply to reduce borrowing costs.

Canada Housing Trust, the financial arm of the housing agency in the nation, sold C $ 39,400,000,000 (38.8 billion U.S. dollars) this year. The issuance surged to a record C 46.9 billion U.S. dollars last year as the credit limit other sources of funding for banks and mortgage lenders.

"It was becoming evident in the performance of voice that might supply was outstripping demand," said David Deslauriers, general director of public finance at Toronto-Dominion Bank, by telephone from Toronto. "The program began to reduce the size of the problems."

Although many factors influence mortgage rates, reduced mortgage bond sales Canada can mean more expensive mortgages for consumers and banks rely on sources of financing more expensive, DesLauriers said. Canada mortgage bonds are backed by the federal government, making them relatively cheap financing.

Canada Housing, the largest issuer of debt after the federal government, sold C $ 23,800,000,000 dollars in fixed rate bonds to five years, C $ 7,900,000,000 of floating-rate bonds for five years and C 7.8 billion U.S. dollars of fixed-rate bonds to 10 years old this year. The Ottawa-based trust, which issued quarterly, buys mortgages to support the sale of debt.

Canada Housing has "done a better job of aligning the size of mortgage bond investors demand," said Andrew Hainsworth, head of capital markets debt at the Bank of Montreal, by telephone from Toronto. "They want a little spread out the performance of CMBS. It is also part of repairing credit markets after the financial crisis."

Ontario passed

yields on housing bonds in Canada five years was trading at about 25.5 basis points above the federal benchmarks this week, compared to 23.5 basis points earlier this year, according to Hainsworth. By contrast, Buenos Aires ranges from five years have increased by six basis points this year.

Elsewhere in credit markets, the extra yield, or spread, investors demand to own the debt of Canadian companies rather than the federal government widened to 140 basis points yesterday from 139 basis points on December 21, according to the rate of Bank of America Merrill Lynch. The spread was as narrow as 114 basis points in March, according to the data. A basis point is 0.01 percentage point.

Canadian corporate bonds returned 6.9 percent this year, including reinvested interest, according to Merrill Lynch index, which is 722 bonds with a nominal value of C $ 284 000 000 000. The bonds rose 15 percent last year.

Provincial earnings

The spread of U.S. corporate debt on Treasury bonds was 169 basis points from December 21, according to another Merrill Lynch index, unchanged from December 20. Treasuries have lost 2 percent this month, comparing his return for the year to 5.7 percent, Merrill Lynch data show. Canadian government bonds have fallen 0.3 percent this month yesterday, trimming the gain of 2010 to 5.9 percent.

In the provincial bond market, the relative yields were 53 basis points yesterday, from 52 on 21 December. It fell to 39 basis points in January, the closer this year. The bonds returned 6.8 percent this year.

The Canadian gross domestic product grew 0.3 percent in October after contracting 0.1 percent the previous month. Statistics Canada releases the data at 8:30 am today in Ottawa.

The mortgage bond spreads were so narrow as 18 basis points in early 2010 and like everyone on May 46 amid the crisis of European sovereign debt, Hainsworth said. The issue has a C average of about 27 billion U.S. dollars annually.

Outlook 2011

Canada believes that demand for housing to finance mortgage lenders, investors' appetite for debt and performance of the broader credit markets when deciding the scale and pricing issues, the trust said in an emailed statement.

The issue may be C $ 40 billion in 2011, based on current emission of about C $ 10 billion per quarter, according to Hainsworth. Besides participating in the Canada Mortgage Bond program, lenders can finance mortgages through other means such as issuing bonds, packaging and selling mortgages as securities backed by mortgages, or financing through deposits, Hainsworth he said.

"That is a reasonable estimate of what we will be seeing in the coming quarters, given what we know now," said Deslauriers, referring to the C $ 40,000,000,000 prognosis.

Canada Housing paid 26.5 basis points over benchmark government on December 15 to sell C $ 6 billion in five years, the debt of 2.75 percent. About a quarter of the question, which was led managed by TD, Bank of America Merrill Lynch, Canadian Imperial Bank of Commerce and Royal Bank of Canada, was bought by international investors.

The issue brought the total of outstanding mortgage bonds C Canada to 195.5 billion U.S. dollars, with the majority of C $ 173 000 000 000, with fixed interest and other floating rate.