Canadian structured finance issuance will be about 5% higher in 2004 than 2003, according to a new report from Moody’s Investor Services.

Canadian structured finance issuance in 2004 should be between $12 billion and $13 billion, says Moody’s in the report.

Most of the projected growth will come from commercial mortgage-backed securities, which will likely grow 20%-30% over the $3.3 billion issued in 2003, as the market continues to attract more participants in the coming year, says Moody’s Toronto-based analyst Charles Gamm, author of the report.

“The dramatic pace of growth in 2003 of the term asset-backed securities market, driven by the participation of Canada’s largest domestic banks in the credit card ABS market, is not expected to continue into 2004. Drawn to the market in advance of pending accounting rule changes, Canada’s Schedule I banks will likely be less active in 2004. Other ABS market segments are expected to continue their growth, but the size of the entire term ABS market will be limited by the lack of many Schedule I credit-card transactions,” the analyst says.

In ABS, 2003’s issuance activity was more than double that of 2002, reaching nearly $12 billion, which was fueled by strong growth in the credit card ABS and MBS sectors. The non-MBS asset-backed securities market saw marked growth in 2003 of approximately $8.7 billion issuance, exceeding 2002 volume by nearly 150%.

This ABS growth was led by credit-card receivable-backed issuance, which jumped by 215% over 2002, while auto related issuance, including lease, retail and dealer floor plan transactions, climbed 160% over 2002. “The Canadian ABS market seems to be maturing, as greater volume has caught up with the breadth of the market. In 2003, new structures were introduced to the market, adding further depth to a market already demonstrating a good variety of asset types and issuers, and diverse ranges of structures to meet investor appetites as well,” Gamm said.

In other structured -finance segments, the Canadian asset-backed commercial paper market had another modest year, with outstandings at year-end totalling approximately $62.1 billion, a 2% decrease from 2002’s $63.4 billion.