The Canadian asset-backed securities market arose from its dormant stage last week as three public deals in as many days priced, helped along by a relaxation in Canadian regulations that are likely to spur more securitization.
Despite the ease with which deals could be issued, Canadian market observers noted that the deals whetted the appetites of many investors, who strongly responded to the issues.
Sources at CIBC said the excellent reception afforded a Pride Trust offering of mortgage-backed securities, originated by newcomer HSBC Canada, enabled Pride to increase the publicly offered portion to $370 million from a planned $300 million, and set the stage for another MBS deal to likely be priced by year-end. The offering also included a companion $160 million private issue.
Equally optimistic were syndicate officials at Scotia Capital Markets who lead managed Hollis Trust, a securitization backed by revolving personal lines of credit issued by the Bank of Nova Scotia. The offering comprised three-year and a five-year tranches, with a planned total of $300 million each. At press time, the officials said they were still tallying the deluge of orders and were projecting a possible final total on the order of $1 billion.
Merrill Lynch Canada rounded out the threesome with a $200 million commercial mortgage-backed securitization comprising five-tranches. This marks the investment bank's second public mortgage conduit deal and sources said the bonds sold quickly.
Sources at Scotia said the success of last week's offerings proves that the Canadian securitization market's environment is healthy and that deals can be completed.
Further, other syndicate sources say the success of these and other recent issues, is altering expectations for pricings in the fourth quarter.
Whereas just a few weeks ago, the prevailing sentiment was that Sept. 30 would literally mark the close of underwriting for 1999, sources said that fear of Y2K is abating and optimism is on the rise. Indeed, some observers now predict active issuance until mid-December.