Fitch Ratings says that investors in Europe and the US are buying Canadian mortgage-backed covered bonds in record amounts so far this year. The bonds are not only backed by mortgage loans but also by the issuing banks, which makes them relatively safe.
However, investors wouldn’t buy them unless they believed that the Canadian housing market offers better returns at lower risk than alternatives.
Gennadiy Goldberg, a fixed-income strategist at Toronto-Dominion Bank told the Globe and Mail
: “If you didn’t really have people believing the Canadian housing story, you wouldn’t have them buying Canadian covered bonds.”
Investors have bought $31 billion in mortgage-backed covered bonds so far in 2015.
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The volatile equities markets are pushing investors towards safer havens and that doesn't seem to include Canada’s housing market.