(In April 17 story, corrects to "Aaa" from "Aaaa" in paragraph
3 and analyst's name to "Hunt" from "Hunter" in paragraph 7)
April 17 Bank of Montreal is bundling
nearly C$2 billion ($1.50 billion) of prime Canadian mortgages
into securities, said Moody's in a pre-sale report on Monday.
The bond is backed by C$1.96 billion of uninsured prime
residential mortgages, more than half of which are in Ontario
and Quebec, added Moody’s. BMO did not respond to requests for
About 95 percent of the securities will be rated "Aaa".
BMO will offer to renew or refinance the mortgage loans at
the end of their term if the borrower is in compliance with
BMO's underwriting criteria at that time.
Upon renewal or refinance of the mortgage loan, BMO will
purchase the mortgage loan from the trust, Moody's said.
"Canada's one of the few jurisdictions that doesn't have a
developed RMBS market, this could be the first step to getting
that going on," Richard Hunt, an analyst at Moody's Investors
Service who rated the deal, told Reuters.
"This could be a template for future deals" Hunt added.
Canada's housing market has been robust in the years since
the global financial crisis, supported by low interest rates
that have seen consumers take on more debt.
But last year's changes by the federal government to tighten
mortgage lending rules are expected to mitigate some of the
run-up in housing seen recently in areas like Toronto and
($1 = 1.3321 Canadian dollars)
(Reporting by John Benny in Bengaluru; Editing by Cynthia