Moody's: Bank of Nova Scotia covered bonds Aaa

Moody's Investors Service said it assigned the long-term rating of Aaa to the series 5 covered bonds issued by the Bank of Nova Scotia under the terms of the Bank of Nova Scotia global public sector covered bond program.

The $2 billion series 5 covered bonds bear interest at 1.25% per annum and mature on Nov. 7, 2014, allowing for a one-year extension.

The covered bonds are obligations of the Bank of Nova Scotia and also are backed by a cover pool consisting of Canadian residential mortgage loans insured by the Canada Mortgage and Housing Corp. and eligible substitute assets, Moody's said.

Since the covered bondholders first have recourse to the issuer, S&P said it assumes that the issuer will continue to make all payments due to covered bond holders while it remains solvent.

The issuing bank, Bank of Nova Scotia, is rated Aa1, the agency said, and thus the likelihood of default by the sponsor is very low.

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