Moody’s Investors Service reports that Canadian structured finance issuance increased by 42% in 2006. It adds that commercial mortgage-backed securitizations rose by 46% in the year.

“CMBS was the sector primarily responsible for this increase in issuance volume,” said Moody’s associate analyst Elena Pankoff, one of the report’s authors, “while volume in credit card backed issuance declined following a historical issuance pattern.” Equipment Securitization rose, but there as an 11% decline in credit card backed issuance.

The estimated volume for 2007 also includes moderate growth in most asset-backed securities (ABS) sectors. However, the potential growth in the CMBS and credit card sectors is likely to be offset by a potential decrease in auto-backed ABS issuance, leading to a flat to marginal issuance growth in 2007, said Pankoff. “It is unlikely that the $3.9 billion of issuance in Auto ABS market in 2006, which included a private transaction of over $900 million will take place in 2007,” said Pankoff. Moody’s expects the total volume in this sector to exceed $2.5 billion in 2007.

Moody’s believes that the Canadian credit card ABS market will likely grow by approximately 10% to an issuance volume of $6 billion in 2007. And, it says total Canadian structured finance issuance is estimated to reach $18.7 billion in 2007.

Securitization remains one of the most important funding sources for issuers like MBNA Canada, Capital One and Canadian Tire, it notes. Canadian banks have remained repeat issuers, albeit with volatile volumes. “We expect the traditional bank-card issuers to return to the market in 2007, with volumes subject to investor demand,” said Moody’s vice president and senior credit officer Charles Gamm, co-author of the report.

Moody’s expects CMBS volume to also increase 10%, reaching a total issuance of $5.25 billion. This growth is expected to come from the organic expansion of the origination and issuance programs from established CMBS market participants.