As part of the emerging popularity of commercial mortgage-backed transactions in Canada, investors are starting to seek more information on CMBS deals.
Responding to this, Norwest Bank Minnesota N.A. (the bank is changing its name to Wells Fargo Bank Minnesota N.A. on July 7) has put online collateral and bond level information for Merrill Lynch Canada's deals since 1999.
Through its ctslink.com/CMBS, Norwest has provided information about Merrill Lynch Mortgage Loans Inc. 1999-Canada 2 and Merrill Lynch Mortgage Loans Inc. 1999-Canada 3.
"The Canadian issuers are looking to us to be able to produce and deliver this type of information in Canada," said Ron Feldman, managing director at Norwest. "We are party to the governing document and our role is a reporting agent."
Norwest makes the information available to the Canadian custodian/paying agent who conclusively relies upon the company's calculations to pay investors.
On the payment date, Norwest puts its complete reporting package up on its Website. Feldman added that it takes typically half a day or two to take information from the servicer and to produce these reports.
Norwest is targeting other potential CMBS issuers in Canada. It is also looking to expand its Canadian operations into other areas such as residential mortgage-backed securities and to asset-backeds, to the extent that Canadian investors have a demand for it.
The importance of this Web-based information is more apparent on the mortgage-backed securities front. Since a lot of the Canadian asset-backed transactions are commercial paper based, there is not much need for this type of information because ABCP transactions are usually guaranteed by a wrap. On the other hand, since mortgage-backed transactions have a senior/subordinate structure, investors rely heavily on whether there's sufficient subordination in the transaction to cover losses. Investors depend on the deal's collateral, thus information on a deal's collateral becomes key.
Aside from Norwest, other companies are also looking into and have the capacity to provide trustee reporting.
Basis100 Inc., an e-commerce technology solution provider, is one of these companies.
"We're looking into continuing the information chain from the start of the transaction, to its subsequent completion and unto its life cycle of servicing," said Elizabeth Green, vice president of corporate development at Basis100.
She added that from an industry perspective there is a tremendous amount of effort being applied to providing this type of reporting because "it is important to take advantage of that information highway beyond just the buying and selling of those tools."
Capital Management Sciences (CMS), which launched its fixed-income software system called BondEdge in Canada last September, focuses on providing information on Canadian government, provincial, municipal and corporate securities.
Though it has an extensive mortgage information system in the States, it has not brought the same operations to Canada. The company has the tools to model Canadian mortgage-backeds in its system, but it does not have a database of them.