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Royal Bank of Canada is the latest Canadian firm to explore a sale of bonds backed by uninsured residential mortgages.

The bank is testing investor interest in a deal that would bundle mortgage loans to borrowers with credit ratings just below prime, known as “alt-A” mortgages, according to Tim Wilson, chief financial officer of Equitable Group Inc., one of the lenders which is originating the loans being bundled.

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“Along with the banks, we’re trying to understand what the investor appetite could be in terms of both volume and price,” Wilson said by phone from Toronto. “Once we get a sense of that, we can make decisions about size, and even if the opportunity makes sense at all.”

Canadian banks are eager to package uninsured home loans into bonds after the federal government last year made it harder for lenders to get government guarantees on mortgages. Bank of Montreal is planning a residential MBS to securitize $2 billion of prime uninsured mortgages. National Bank of Canada is exploring investor interest in a deal that would be backed by MCAP Corp. “alt-A” mortgages.