Caisse de depot et Placement du Quebec, which started to roadshow its $350 million commercial mortgage-backed transaction last Thursday (the largest so far in the Canadian CMBS market), is prepping the first public Canadian collateralized loan obligation, likely to come to market sometime in June.

Though CLOs are not new to the Canadian market, previous transactions have all been conduit-based, thus remaining relatively private and unpublished.

Market players consider this a welcome development and are expecting others to follow suit. It is also seen as something that might spur the development of a high-yield market, an event that has been anticipated in the Canadian market for some time now.

However, Canada's big banks may take time to warm up to going public with this product as they face disclosure issues.

"There's a lot of disclosure that the banks would have to make about their origination and risk management processes as well as pricing information that banks might be uncomfortable divulging to the market at large," said Mark Adams, an assistant VP at Dominion Bond Rating Service.

Caisse, on the other hand, a regular issuer in the public term market, is said to be more comfortable in the public arena.


Caisse's CMBS transaction, considered to have a fairly concentrated portfolio, is backed by nine mortgages on six properties, with one of the properties constituting about 40% of the portfolio.

Merrill Lynch's $280 million CMBS deal is expected late this month or early next month while Toronto Dominion's $275 million issue through Solar Trust will likely come to market late April or beginning of May.

Aside from the three CMBS deals, MBNA is also rumored to be working on a credit card deal. As of press time, timing and size of the transaction are unknown. The company came to market twice last year with a $400 million, five-year fixed-rate transaction in June and $350 million three-year fixed-rate deal in December.

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