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Alberta floods unlikely to affect Canadian covered bonds: Fitch

While the costs of the damage to the residential property market are yet to be determined, Fitch notes that the Alberta government has approved an initial allocation of $1 billion in relief funding to help residents and businesses rebuild. “We believe this will be the primary source of financial assistance to homeowners as their insurance policies generally do not cover ‘overland flooding’,” it says. The impact on residential pricing is also uncertain, Fitch says. Current prices are about 14% overvalued, it suggests. Yet, it also says that recent home sales activity suggests that the market remains robust. Share this article and your comments with peers on social media Fitch Ratings said Wednesday that Canadian covered bond programs that are secured by residential mortgages should not be negatively affected by the catastrophic floods in southern Alberta. The rating agency reports that loans on properties located in Alberta represent about 15% of cover pools on average, and that regional lenders have even less exposure to Alberta in their cover pools. Additionally, the mortgage insurance on the loans from the Canada Mortgage and Housing Corporation (CMHC) will also help mitigate the impact, it says. James Langton Keywords Bond When bond ratings slip, investors shrug With bond yields low and rising, what is the price of safety? Catastrophe bond market gains momentum Related news Facebook LinkedIn Twitter read more