Dominion Bond Rating Service has released its annual review of Canadian asset-backed securities, reporting that the market grew 5% in 2004.

The theme in the Canadian ABS market in 2004 was new asset-backed securities term issuance, with 16 new ABS transactions contributing $9.8 billion of new term notes, DBRS reports.

Other notable developments in the market 2004 included an increase in securitizations of auto receivables, growth in CMBS issuance through fusion deals, an increase in conduit-funded CDO/CLO transactions, and an increase in securitizations of credit card receivables by Canadian banks.

The Canadian ABS market grew by 5% in 2004 with the total ABS outstandings finishing at $101.7 billion, DBRS reports. Aggregate asset-backed commercial paper outstandings remained steady at $67 billion, in keeping with the moderate growth trends seen since 2000.

DBRS says that this growth is expected to continue through 2005, as sellers look to fund securitizations for commercial mortgages, auto receivables, and credit card receivables through the term ABS markets. It expects growth in auto securitizations (auto loans and auto-leases) and CMBS issuance to continue in 2005. CMBS issuance is also expected to continue in 2005, helped by strong collateral performance, inclusion of large trophy assets in pools, new innovative structures, and less conservative financing terms, the report says.

And, growth is expected to continue in the CDO/CLO asset class with the proliferation of multi-level CDO structures. “This could be challenged by the tight corporate spread environment that potentially limits arbitrage opportunities,” it adds.