Home Equity Income Trust Subsidiary Issues Medium Term Notes

    TORONTO, Dec. 10 /CNW/ - Home Equity Income Trust (TSX: HEQ.UN) ("HOMEQ"
or the "Trust") today announced that its subsidiary, CHIP Mortgage Trust
("CMT"), has arranged the sale of $125,000,000 of senior medium term notes
(the "Notes"). The dealer syndicate for the sale included RBC Capital Markets
and Scotia Capital Inc. The 2007- 3 Notes have a coupon of 5.613%, are rated
AAA by Dominion Bond Rating Service Limited and have an expected final payment
date of May 2, 2011. They are unconditionally guaranteed by Home Equity Income
Trust. The sale is expected to close on or about December 14, 2007.
    On or about December 10, 2007, CMT is expected to file with the
securities commissions and other similar regulatory authorities in each of the
provinces of Canada, the third prospectus supplement to the Short Form Base
Shelf Prospectus of CMT ("Prospectus") dated November 23, 2007. Under the
Prospectus, CMT may issue up to a total of $750 million of medium term notes
from time to time over the 25 months following the date of the Prospectus. The
first two offerings under the Prospectus were for senior medium notes of
$22 million and subordinated medium term notes of $20 million in November 2007
    HOMEQ, through its subsidiaries, finances its portfolio of reverse
mortgages through a combination of equity and debt including commercial paper,
senior and subordinated debt. The debt is rated by Dominion Bond Rating
Service Limited. The commercial paper program is rated R1-high and the senior
debt AAA, which are the highest possible ratings, and the subordinated debt is
rated BBB.
    In order to manage interest rate risk, the Trust has matched the term of
the newly issued debt with the interest resets of its mortgages using interest
rate swaps. On a swapped basis, the interest rate of the new senior notes is
121 basis points over the 1 year Bankers Acceptance rate.
    "We are very pleased with the level of investor interest in the Notes.
The proceeds will be used to reduce commercial paper and to finance new
originations of reverse mortgages, which have amounted to a record
$118 million over the 12 months ended September 30, 2007. This is a very
meaningful transaction which, despite particularly uncertain times in the
capital markets, will allow us to continue to fund new originations and to
focus our full attention on growth in the business," said Gary Krikler, Senior
Vice President and Chief Financial Officer of the Trust. "Taking the new Notes
into account, the Trust has a weighted average effective cost on $605 million
of senior medium term notes of approximately 50 basis points over the
corresponding Bankers Acceptance rate."

    Forward Looking Statements

    HOMEQ from time to time makes written and verbal forward-looking
statements about business objectives, operations, performance, and financial
condition, including, in particular, the forecast of cash distributions and
the likelihood of HOMEQ's success in developing and expanding its business.
These may be included in the Annual Reports, regulatory filings, reports to
unitholders, press releases, Trust presentations and other communications.
These forward-looking statements are based upon a number of assumptions and
estimates that are inherently subject to significant uncertainties and
contingencies, many of which are beyond the control of HOMEQ. Actual results
may differ materially from those expressed or implied by such forward-looking
statements. HOMEQ does not undertake to update any forward-looking statement,
whether written or verbal, that may be made from time to time.

    About Home Equity Income Trust

    Home Equity Income Trust provides unitholders with stable monthly cash
distributions from a portfolio of reverse mortgages originated by its wholly
owned subsidiary Canadian Home Income Plan Corporation ("CHIP"). HOMEQ's units
are rated SR-2 by Standard and Poor's, which assigns this rating to funds that
have "a very high level of cash distribution stability relative to other rated
Canadian income funds." As of September 30, 2007, the portfolio generating
cash returns to the Trust comprised approximately 6,600 reverse mortgages with
an accrued value of $678.4 million, secured by residential properties across
Canada worth approximately $1.9 billion. CHIP (www.chip.ca), has been the main
underwriter of reverse mortgages in Canada since pioneering the concept in
    HOMEQ's units trade on the Toronto Stock Exchange under the symbol
HEQ.UN. Additional information on HOMEQ, including annual and quarterly
reports and the Trust's distribution reinvestment plan, can be viewed at

    %SEDAR: 00018040E

For further information:

For further information: Gary Krikler, Senior Vice President and Chief
Financial Officer, (416) 413-4679, gkrikler@homeq.ca, or Scott Cameron, Vice
President, Finance, (416) 413-6605, scameron@homeq.ca

Organization Profile


More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890