Late Friday, the SEC released a no-action letter and related correspondence permitting a Canadian covered-bond issuer to sell its stuff through a shelf registration to all investors, eliminating the previous limit that allowed covered-bond sales only through private placements to qualified investors. We have reviewed these documents and conclude from them that the SEC’s decision opens a big door for U.S. mortgage-backed covered bonds despite ongoing regulatory and legislative uncertainties. Although it’s too early to say if this open door leads to a revitalized private secondary market, we here assess the odds that this in fact results.

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