When determining the margin for a mortgage-backed security (MBS) guaranteed by a corporate debt issuer, what multiplier is applied to the guarantor's applicable debt margin rate?
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The requirement is fixed at 50% of market value regardless of the guarantor's rating.
The requirement is 1.25 times the applicable margin rate set out for the guarantor's debt.Correct
The requirement is equal to the Government of Canada bond rate for the same maturity.
The requirement is 75% of the margin rate applicable to the guarantor's senior unsecured notes.
Why
Rule 5227(1) states that for corporate or bank-guaranteed MBS, the rate is 1.25 times the rate of the guarantor.
