Standard & Poor's analysts are projecting that 2012 Canadian covered bond issuance will reach C$20 billion. However, this number is below 2011's record C$25.7 billion.

Analysts estimated a total of C$60 billion added issuance capacity, which they based on the regulatory 4% limit of total assets for banks that have established covered bond programs.

Outstanding Canadian covered bonds doubled to C$51 billion in 2011 and will continue to rise this year, a positive for the sector’s liquidity, S&P analysts said.

The country's covered bond programs’ underlying residential mortgages have performed well and have exhibited strong credit qualities, analysts stated.

In other Canadian covered bond news, Moody's Investors Service  assigned provisional 'Aaa' rating to Toronto Dominion Bank's Series 4 covered bonds.

The rating agency has assigned the long-term rating of '(P)Aaa' to the U.S. dollar-denominated Series 4 covered bonds to be issued by TD Bank under the  terms of its €10 billion Global Public Sector Covered Bond Program.

The covered bonds are obligations of TD and are backed by a cover pool comprising Canadian residential mortgage loans insured by the Canada Mortgage and Housing Corp. (CMHC).

According to Moody's, TD has a long-term rating of 'Aaa' and thus the likelihood of default by the sponsor is very low. Since the covered bondholders first have recourse to the issuer,

Moody's analysts assumed that the issuer will still make all payments due to covered bond holders while it stays solvent. The rating agency used the senior unsecured debt rating of the issuer as  a means to determine the likelihood of default for a typical covered bond.

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