Income-seeking individual investors are being served up high-yielding, high quality alternatives to federal and provincial savings bonds, as government of all stripes compete for financing.
The Regional Municipality of Peel, in Ontario, is raising a total of $390-million in a bond offering launched on Monday, a financing that included $10-million of notes targeted directly at individual investors. Traditionally, this type of bond offering went straight to the institutional crowd.
Peel, a regional government that enjoys a triple A rating, is selling a series of one-year to 10-year debentures to retail investors as part of this financing, TD Waterhouse said in a report late Monday. The offering comes with the province of Ontario in the midst of its annual savings bond drive: Fixed rate Ontario three years savings bonds offer 2.5 per cent interest rates.
Peel is also pitching a 30-year bond that pays 30 basis points over the comparable Ontario government debt, which is a substantial premium in the fixed income world.
This offering is being sold through the bank-owned dealers that feature large retail sales networks, with RBC Dominion Securities, CIBC World Market, National Bank Financial, BMO Nesbitt Burns, Scotia Capital and TD Securities leading the underwriting.
Individual investors are looking for extra income at a time when federal government bond yields are at record lows.