Canada's Covered Bonds Boom as Europe Seeks Yield

The video discusses the high demand for bonds in Europe, driven by the European Central Bank's (ECB) bond-buying program. This demand has led to a scarcity of highly rated credits for institutional investors. The video also highlights the risks associated with issuing large amounts of debt, especially in light of potential housing market declines in Toronto and Vancouver. Fitch Ratings has accounted for a possible 25% drop in the housing market in their analysis. The structuring of bonds by banks, which includes pooling non-insured loans and removing delinquent loans, is also covered. The video concludes with insights from analysts on these trends.

What is the primary reason for the high demand for bonds in Europe?

• The European Central Bank's bond-buying program

• A rise in corporate profits

• A decrease in interest rates

• Increased government spending

What is a potential risk associated with issuing a large amount of debt?

• Increased bond ratings

• Overheating of the housing market

• Higher interest rates

• Decreased investor interest

How does Fitch Ratings account for potential risks in the housing market?

• By ignoring the risks

• By anticipating a 25% decline in the housing market

• By increasing interest rates

• By reducing bond issuance

What is one way banks structure bonds to manage risk?

• By reducing loan amounts

• By increasing interest rates

• By pooling non-insured loans

• By pooling insured loans

What happens to mortgage loans that are delinquent for more than 60 days?

• They are sold to other banks

• They are considered collateral for the bonds

• They are removed from the pool of collateral

• They are insured by the government