Fannie Mae could be among green and social debt issuers worldwide that Canadian lenders could look to as the North American country seeks to bridge a funding gap of as much as C$120 billion ($95 billion) for affordable housing as well as reducing greenhouse gas emissions, the federal government’s housing agency said.
The sustainable mortgage bonds, whose underlying collateral include a range of eligible housing loans, could be issued as government guaranteed or private-label residential mortgage-backed securities as well as covered bonds, the Canada Mortgage and Housing Corp. said in a report Thursday.
Fannie Mae’s multifamily green bond framework and Nederlandse Waterschapsbank NV’s SDG housing bond structure are among ESG programs that could offer “plausible lessons” for issuers in Canada considering sustainable mortgage funding programs, said the agency.
The Canadian instruments could be used to support affordable and accessible housing for vulnerable groups including seniors, refugees, victims of domestic violence or people with disabilities. Also they may be used to finance the development or retrofitting of buildings to reduce the residential sector’s environmental footprint.
“While this type of ESG bond might not be the sole solution to address the affordable housing gap, we expect them to become a catalyst for the housing sector,” said Carlos Mandujano, a project manager at CMHC. “SMBs would also play a relevant role in achieving energy efficiencies.”
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