This year has proven to be an interesting one for the covered bond market, and we anticipate that 2013 will bring many important new developments. During 2012, the covered bond market continued to provide attractive financing opportunities for European banks. However, many of the most noteworthy developments in 2012 occurred outside the Eurozone. Various new jurisdictions approved covered bond legislation, including Canada, Mexico, Morocco, New Zealand, Singapore, and South Korea. We saw various covered bond issuances from Australia and also from Latin America. Quite a number of foreign banks accessed the U.S. dollar market with issuances into the United States conducted on an exempt (Rule 144A) basis and sold to institutional investors. This year also saw the first U.S. SEC-registered covered bond offering. These dollar-denominated issuances proved that there is a significant investor base for covered bonds in the United States. A number of key regulatory developments, including CRD IV in Europe, Basel implementation in the United States, and limitations on concentrations and risk weightings, will have a significant influence on the shape of things to come. As we head into 2013, our crystal ball tells us that non-European covered bond issuances are likely to remain significant. We also remain hopeful that, with a recovery in the housing market and the elections behind us, 2013 will prove the magic year for covered bond legislation in the United States. Below we provide a brief update on Canadian and U.S. developments.

I. CMHC Announces Details of the New Canadian Covered Bond Framework -

On December 17, 2012, the Canada Mortgage and Housing Corporation (“CMHC”) announced the details of the new legislative framework for Canadian covered bonds.1 Details of the new framework were published in the Canadian Registered Covered Bond Programs Guide (the “Guide”), which provides the conditions and restrictions applicable to registered covered bond issuers and registered covered bond programs.2 Only Canadian issuers that meet all of the requirements specified in the Guide can issue registered covered bonds.