BMO Bundles Uninsured Mortgages in a Canadian Bond First
- Lender is looking to securitize uninsured prime mortgages
- Deal follows new rules that limit government insurance
The Bank of Montreal (BMO) building, center, stands in the financial district of Toronto.
Photographer: Brent Lewin/BloombergThis article is for subscribers only.
Bank of Montreal is bundling uninsured residential mortgages into bonds in what could be the start of a new debt market for Canadian banks as the government scales back its support for home loans.
The Toronto-based lender is planning to sell debt backed by nearly C$2 billion ($1.5 billion) of prime uninsured mortgages through a trust. That’s a novel development in a country where big banks have historically packaged government-insured mortgages into bonds. Much of the securities will be purchased and retained by the bank, according to Moody’s Investors Service.