Canada Mortgage and Housing Corp.'s (CMHC) plan to introduce Canada Mortgage Bonds (CMBs) - bonds that feature semi-annual interest payments, a repayment of principal at maturity and payment guarantee by CMHC - will have both a good and bad effect on the Canadian securitization market, sources say.

These bonds will be issued through a special purpose trust called Canada Housing Trust. Proceeds from the sale of these bonds will be used to buy mortgage-backed securities. Bondholders will be paid with the interest and principal from the funds derived from the underlying mortgages.

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