Morningstar DBRS Assigns AAA Credit Rating to BMO Global Registered Covered Bonds, Series CBL40

Published: 2026-04-17 05:06:16 ET BMO.TO

Published on 04/17/2026 at 05:06 am EDT

DBRS Limited (Morningstar DBRS) assigned a credit rating of AAA to the Covered Bonds, Series CBL40 (Series CBL40) issued under the Bank of Montreal (Global Registered Covered Bond Program) (the Program).

Series CBL40 (GBP 1 billion) has a coupon rate of SONIA + 0.5% and a maturity date of April 16, 2029. All covered bonds issued under the Program (the Covered Bonds) rank pari passu with each other and are currently rated AAA by Morningstar DBRS.

The AAA credit ratings are based on the following analytical considerations:

A Covered Bond Attachment Point of AA, which is the Long-Term Senior Debt rating of the Bank of Montreal (BMO). BMO is the Reference Entity for the Program.

A Legal and Structuring Framework (LSF) assessment of Strong associated with the Program.

A Cover Pool Credit Assessment of AAA.

An LSF-Implied Likelihood (LSF-L) of AAA.

While not currently applicable, based on the recovery notching scale, up to two notches' uplift from the LSF-L for high recovery prospects is possible.

A level of overcollateralization (OC) of 7.0% (based on the Asset Percentage of 93.5% as at February 28, 2026) to which Morningstar DBRS gives credit.

Morningstar DBRS considered the following factors in its analysis described above:

Despite these strengths, the credit ratings on the Covered Bonds could face the following challenges:

BMO is one of Canada's largest banks as measured by assets as at January 31, 2026, with assets of $1,458.1 billion and total equity of $85.8 billion. It is the initial servicer of the mortgages in the Cover Pool.

Morningstar DBRS' credit ratings on the Covered Bonds addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations for the Covered Bonds are the related Interest Amounts and the related Principal Amounts.

Morningstar DBRS's credit rating does not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations.

Morningstar DBRS's long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS

There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings at https://dbrs.morningstar.com/research/454196 (May 16, 2025).

Notes:

All figures are in Canadian dollars unless otherwise noted.

The principal methodology applicable to the credit rating is Rating and Monitoring Covered Bonds at https://dbrs.morningstar.com/research/476961 (March 24, 2026).

Other methodologies referenced in this transaction are listed at the end of this press release.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at [email protected].

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

More details on the Cover Pool and the Program are provided in the Monthly Canadian Covered Bond Report, which is available by clicking on the link under Related Documents or by contacting us at [email protected].

This credit rating is endorsed by DBRS Ratings Limited for use in the United Kingdom, and by DBRS Ratings GmbH for use in the European Union, respectively. The following additional regulatory disclosures apply to endorsed credit ratings:

The last credit rating action on this Program took place on April 8, 2026, when Morningstar DBRS discontinued its credit rating on the Covered Bonds, Series CBL21 as the Series was fully repaid.

For further information on Morningstar DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://registers.esma.europa.eu/cerep-publication. For further information on Morningstar DBRS historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

Lead Analyst: Geetika Gupta, Senior Vice President, Canadian Structured Finance Ratings

Rating Committee Chair: Clara Vargas, Senior Vice President, Sector Lead, Canadian Structured Finance Ratings

Initial Rating Date: April 28, 2014

DBRS Limited

DBRS Tower, 181 University Avenue, Suite 600

Toronto, ON M5H 3M7 Canada

Tel. +1 416 593-5577

The credit rating methodologies used in the analysis of this transaction can be found at:

https://dbrs.morningstar.com/about/methodologies.

Operational Risk Assessments for Canadian Structured Finance (April 2, 2026;

https://dbrs.morningstar.com/research/478045)

Legal and Derivatives Criteria for Canadian Structured Finance (June 24, 2025;

https://dbrs.morningstar.com/research/456831)

Interest Rate and Currency Stresses for Global Structured Finance Transactions (January 26, 2026; https://dbrs.morningstar.com/research/472333)

Predictive model: Canadian RMBS Model (Version 5.0.1.1 https://dbrs.morningstar.com/models)

A description of how Morningstar DBRS analyses structured finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/410863.

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at [email protected].