The Globe and Mail

At a time when banks want to have access to every possible source of capital, Bank of Montreal has staged a successful 1-billion euro debut in the European covered bond market.
BMO priced its covered bond offering Wednesday, following a trail blazed last year by Royal Bank of Canada. By tapping into this deep reservoir of low-cost capital, both banks are diversifying their sources of funding. The remaining Canadian banks are also expected to issue covered bonds in coming months.
RBC did a 1.25 billion euro covered bond issue late last year, selling debt backed by the bank’s residential mortgage portfolio. Dutch and German banks have been raising money this way for centuries, and recent changes to Canadian regulations opened the door for domestic banks.
The BMO financing was priced with a yield 4 basis points higher than the RBC debt – there are 100 basis points in a percentage point. The offering was led by BMO Nesbitt Burns, HSBC, Morgan Stanley, Societe Generale and Unicredit.