Even after a few years have gone by, the Canada story isn’t getting old.
Since the worst of the financial crisis, the country’s solid economy and financial system have been praised around the world. We’re stable. We’re prudent. Everyone supposedly wants to invest in us.
You would assume that at some point this story becomes a little boring. And have no doubt, it eventually will. But not yet, not with Europe still in a mess, Japan still recovering from its devastating earthquake and the U.S. growing very, very slowly.
Proof that the Canada brand is still hot came in the form of a government debt deal priced in U.S. dollars.
On Tuesday, the federal government issued $3-billion (U.S.) of new bonds, and earlier Wednesday it was revealed that the book reached almost $10-billion. Demand was also spread around the world, with the Americas accounting for 45 per cent, Europe, the Middle East and Africa making up 36 per cent and Asia coming in at 19 per cent.
In part, the demand was so strong because the Canadian government doesn’t typically sell U.S.-dollar denominated debt. It’s last U.S.-dollar deal came in 2009, and before that the latest deal was 2001.
Still, Canada’s fiscal strength played a huge role and the government was rewarded for it. The deal’s spread to U.S. Treasuries was the tightest since 2003, and it still blew out.