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CHIP Prices, TD Eyes Conduit Launch

Published 2 Min Read

Canadian Home Income Plan (CHIP), the country’s only issuer of reverse-equity mortgages, recently priced its initial public offering, which received strong investor interest.

“The investors really liked the structure and the public nature of the deal,” said Darcy Doherty, director of securitization at Scotia Capital, which was lead manager in the offering. He added that there were 19 investors who participated in the deal, a good showing for a $119 million transaction.

The $119 million issue, which was backed by reverse mortgages, was separated into two tranches: an $85 million five-year, fixed-rate tranche and a $34 million five-year floating-rate part. The second tranche was oversubscribed with orders running up to just over $100 million.

Meanwhile, TD Securities is planning on setting up a multi-seller conduit, still unnamed, which might happen as early as August but is more likely to occur in September.

“The amount of new business we have in our pipeline is going to require us to create a new multi-seller vehicle,” said William Furlong, managing director at TD Securities. “Currently, we have seven SPV’s funding around C$18 billion of ABCP, and given that each SPV is near or at its practical funding limit (around C$3 billion) we will require another SPV to fund this new business.”

Aside from the planned launch, TD Securities is currently working on a couple of asset-backed issues. National Bank of Canada is also expected to come to market with an ABCP offering through its Vision Trust sometime in August (see ASR Whispers 7/17/00).

Another notable development in the ABCP side is the current tightening of spreads from ten basis points over Banker Acceptances (BA’s) in the beginning of the year to the current two to four basis points over BA’s.

“The demand for the paper has really been good,” said TD’s Furlong. “In fact, some ABCP is not readily available as many investors continuously roll their maturing investments so that they will not lose access to the programs. So the combination of increased demand and stable supply is causing ABCP spreads to tighten.” –

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