Mr. Geetika Gupta reports

Debt rated:  covered bonds, Series CB2

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB6

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB7 (tranche 1)

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB7 (tranche 2)

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB7 (tranche 3)

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB8

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB9

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB10

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB11

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB12

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB13

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB14

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB15

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB16

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB17

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB18

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB19

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB20

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB21

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB22

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB23

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB24

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB25

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB26

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB27

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

Debt rated:  covered bonds, Series CB28

Rating:  AAA

Trend:  n/a

Rating action:  confirmed

DBRS Ltd. has confirmed the rating of AAA on the Series CB27 covered bonds issued under Royal Bank of Canada's global covered bond program following the reopening of Series CB27. RBC reopened the Series CB27 covered bonds by issuing an additional 112 million euros with the same coupon rate (1.616 per cent) and maturity date (Dec. 15, 2034) as the initial issuance. The total amount of Series CB27 covered bonds outstanding after the reopening is 410.5 million euros. As all covered bonds issued under the program rank pari passu with each other, DBRS has also confirmed the AAA ratings of all other outstanding series.

The AAA ratings are based on three building blocks:

1. RBC's issuer rating of AA;
2. The legal and structuring framework assessment of strong;
3. The cover pool credit assessment of at least A.

The following factors were considered in the analysis for the three building blocks above:

1. The covered bonds are senior, unsecured, direct deposit obligations of RBC.
2. In addition to a general recourse to RBC's assets, the covered bonds are supported by 7.5-per-cent overcollateralization in a diversified collateral pool of first-lien, conventional residential mortgages with maximum loan to values of 80.0 per cent at origination in Canada (the cover pool), based on the asset percentage of 93.0 per cent as of Dec. 31, 2015. The cover pool of approximately $52.4-billion as of Dec. 31, 2015, has experienced low credit losses historically. The mortgages may have amortizing and non-amortizing revolving loan parts secured by the same first lien. Only the amortizing loan parts are in the cover pool.
3. The covered bonds benefit from several structural features, such as a reserve fund (when applicable), and rating thresholds for the swap counterparties, servicer and cash manager.
4. Upon a default by RBC, the final maturity date on the covered bonds can be extended for 12 months, which increases the likelihood that the covered bonds can be fully repaid.
5. There is a specific covered bond legislative framework in Canada. In addition, the contractual obligations of the transaction parties are supported by Canada's well-developed commercial and bankruptcy laws, the satisfactory opinions provided by legal counsel to RBC, and a generally creditor-friendly legal environment in Canada.

Despite the above strengths, the rating could face the following challenges:

1. A weakened housing market in Canada could result in higher defaults and/or lower recoveries than the assumptions used in the cover pool credit assessment. This risk is significantly reduced by the home equity available in relation to the portfolio weighted-average LTV of 52.8 per cent (based on indexed property value) reported by RBC as of Dec. 31, 2015.
2. RBC may need to add mortgages to maintain the cover pool, incurring substitution and potential credit deterioration risk. These risks are mitigated by the continuing monitoring of the cover pool to ensure that the OC available is commensurate with the rating of the covered bonds. Based on the latest review of the cover pool, DBRS considers 5.0-per-cent OC, corresponding to an asset percentage of 95.2 per cent, commensurate with the AAA rating.
3. There is an inherent liquidity gap between the scheduled payments of the covered bonds and the repayment of the underlying mortgage loans over time. This risk is mitigated by the OC, the buildup of a reserve fund if RBC is not rated at least A (low) or R-1 (middle), and the 12-month maturity extension upon default by RBC.

DBRS notes that there is no cap on indemnity amounts payable to service providers in the payment waterfalls following the issuer default or acceleration of the covered bond payments as expected in DBRS's legal criteria for Canadian structured finance methodology. Should the indemnity be above a reasonable amount, DBRS will assess the impact of uncapped cash outflow at the time and take appropriate rating action. In addition, DBRS's legal criteria for Canadian structured finance methodology indicate that DBRS expects to be an addressee of all legal opinions; however, DBRS will not be an addressee of a foreign legal opinion in this case.

There is no specific rating report for Series CB27; however, the rating report for the program was last updated on July 24, 2013, to reflect changes since the enactment of the legislation and the guide issued by the Canada Mortgage and Housing Corp.

RBC is one of Canada's largest banks as measured by assets, with assets of $1,074.2-billion and $57.0-billion in common equity as at Oct. 31, 2015. It is also the servicer of the mortgages in the cover pool.