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RBC unveils SEC-registered covered bonds

The Royal Bank of Canada (RBC) has unveiled covered bonds registered with the US Securities and Exchange Commission, facilitating the debt to be marketed to retail investors in the US.

With the latest floating of SEC-registered covered bonds, RBC became the first bank to come up with such a financial product in the US, reported the Financial Times.

RBC and its mortgages backed bonds received a fair response from investors, and the bank successfully disposed of $2.5bn worth of five-year covered bonds at 35 basis points above the benchmark mid-swaps rate.

The bank worked extensively with US Securities and Exchange Commission to get registered the covered bonds, and many other banks are expected to follow the path.

The new SEC-registered covered bonds will be entitled to be marketed to smaller retail investors and big bond indices.

RBC Capital Markets covered bonds origination head Ben Colice told the Financial Times, "Investors were keen to participate in the sale of the bonds, taking advantage of what an SEC-registered security can offer, such as ample liquidity and index eligibility."

"Having that registration helped us attract a wide and diverse pool of investors," he added.

Colice pointed out that the lender has already filed a $12bn "shelf" registration with the SEC, which might provide up to $9.5bn in additional covered bond sales.