Bank of Nova Scotia second to get SEC bond shelf
By Owen Sanderson
LONDON, June 4 (IFR) - Bank of Nova Scotia is ready to access the full range of US investors, as well as join the mainstream US bond indices, after it became the second bank to register a covered bond programme with the Securities and Exchange Commission.
RBC sold the first SEC-registered covered deal in September last year, and covered bond market participants have been eagerly awaiting others to join the nascent market.
The other Canadian majors, including Toronto Dominion, BMO, and National Bank, are likely to follow suit and obtain SEC registration, though CIBC has explicitly ruled the option out, according to a DCM banker familiar with the situation.
SEC registration is a challenging process requiring high levels of disclosure from issuers, which took RBC at least six months.
Most bonds from foreign issuers targeting US investors use rule 144A, which only allows placement to qualified institutional buyers.
SEC registration diversifies the possible investor base, although it is a point of debate in the market whether RBC achieved a worthwhile cost saving in return for the extra burdens involved.
The US has also been working on its own covered bond law, which would allow domestic institutions that already have SEC registrations to issue covered bonds. But the talks have been going on for years as part of wider discussions about how to reform the US mortgage market, and show no sign of any immediate breakthrough.
Bank of Nova Scotia's shelf names Barclays and Scotia Capital, the in-house investment bank of Bank of Nova Scotia, as dealers. Allen & Overy, and Morrison Foerster were legal advisors.
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