Montreal-based National Bank of Canada (NA.T) sold US$600 million of triple-A-rated covered bonds in the U.S. credit markets Monday, according to a person familiar with the deal.

The deal is a reopening of a $1.4 billion, 2.20% coupon deal maturing in October 2016.

The bonds were priced to yield 1.417%, or 67 basis points over Treasurys. It was sold in the Rule 144a private-placement market.

Covered bonds offer investors additional safety because payments are guaranteed, or "covered," by the borrower as well as by a portfolio of actively managed mortgages. These bonds are 100% guaranteed by prime mortgages insured by the Canada Mortgage and Housing Corp., a government agency. They boast top ratings from Moody's Investors Service, Fitch Ratings and from Toronto ratings firm DBRS.

The sale was led by National Bank Financial, Royal Bank of Canada, and the Royal Bank of Scotland.

National Bank of Canada had $2.4 billion of covered bonds outstanding as of year-end 2011, according to DBRS.

The Bank of Montreal (BMO, BMO.T) sold $2 billion of 1.95% coupon, five-year covered bonds to the U.S. bond market on Jan. 23. They priced at 1.987%, or 108 basis points over the Treasury rate.

-By Patrick McGee, Dow Jones Newswires; 212-416-2382; patrick.mcgee@dowjones.com

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