Haventree or MCAN Financial? | General financial discussion | Discussion forum

dickyran333 said
I'm thinking of investing in a 5-year GIC and considering the following 2 options:
1) Haventree Bank (5.25%)
2) MCAN Finanical (5.30%)

Both offer CDIC-insured GICs and come under OSFI rules and regulations. But I still wanted to assess the risk as if I'm investing without any CDIC coverage. So I spent some time online.

Haventree: (since 1990) They are predominantly in the business of mortgage financing for borrowers with non-standard credit. Their goal is to be the first choice in the non-/near-prime mortgage market. They don't offer checking and savings accounts like a typical bank but raise funds through GIC offerings.

MCAN: (since 1980) They are also predominantly in home mortgages (55% of 2022 revenue) but do offer construction loans as well (about 40% of revenue). They are a PLC listed on TSX (MKP). I looked at their financials and they appear to be okay ($4 billion in assets as of Dec 2022 and 2022 annual revenue and net income of $101 million and $55 million respectively). They have paid uninterrupted dividend since 2010.

While both of them depend heavily on home mortgages, I think MCAN Financial is a comparatively safer bet, at least until the collapse of the Canadian real estate market, which some pundits feel could happen in the upcoming recession.

Do people here also think MCAN is a safe GIC investment in the current market?

So far, my GICs are only with the regular banks and CUs and so I thought I'd seek any good or bad experiences, suggestions, etc. from the folks here as I see that MCAN was discussed in 2017 and then in 2020-21 in another thread.  

Until the federal government stops enabling a two-tier deposit insurance system by de facto implicitly guaranteeing the deposits, without limit, of 'too big too fail'-labelled D-SIFI institutions, if you are looking for absolute safety, I would not recommend exceeding your CDIC limits with either of these institutions. MCAN Mortgage Corporation offers you a bit more transparency and accountability, being publicly-traded, than the private equity-owned Haventree Bank, but that's about it. Your uninsured deposits would still rank higher than Haventree's unsecured debentures and certainly common and preferred equity, but that's about it.

Cheers,
Doug

kesa said
"A fee of $25 is required per transaction for agent transfer and re-registration."

What’s this, exactly?

ref: https://mcanfinancial.com/images/term-deposit/MCAN_Wealth_Term_Deposit_Rate_Sheet.pdf  

Oddly worded, but likely related, say, if you hold an MCAN GIC with one deposit broker and transfer it out to another deposit broker. It may also only apply to MCAN GICs in registered accounts, too, and only those held through deposit brokers outside of the FundSERV system. I've not heard of anyone hold an MCAN GIC with a discount brokerage through FundSERV being charged such a fee.

Cheers,
Doug

dickyran333 said
…
Do people here also think MCAN is a safe GIC investment in the current market?
…

I found no debt ratings for MCAN Mortgage Corporation from ratings agencies like DBRS and Fitch. Fitch has issued a servicer rating for MCAN. But, that rates how well MCAN services the mortgages they administer, not how risky their debt is.

One is taking on risk in placing funds into uninsured deposits issued by a company with no debt rating.

The weight on residential mortgages is not really meaningful. Mortgage investment corporations, like MCAN, take on mortgages that the regular banks reject. They aren't in business to compete with the regular banks for prime mortgages.

Yes, the first $100,000 would be covered by CDIC.

The OP asked about "the risk as if I'm investing without any CDIC coverage". The risk I wrote about is about the uninsured part above $100,000.

Norman1 said
The weight on residential mortgages is not really meaningful. Mortgage investment corporations, like MCAN, take on mortgages that the regular banks reject. They aren't in business to compete with the regular banks for prime mortgages.  

There is an important difference here between MCAN Mortgage Corporation and other non-regulated MICs. While they do tend to cater to so-called alt-prime and near-prime as well as commercial borrowers, they are still regulated by OSFI and must adhere to OSFI's lending standards, including mortgage stress testing requirements, versus other MICs or private lenders.

Cheers,
Doug