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Financial information is displayed on screens and a ticker inside the London Stock Exchange in the City of London in 2015.Matt Dunham

The Newfoundland and Labrador government is looking to the European capital market to lower borrowing costs, opening a listing on the London Stock Exchange to find new buyers for the province’s debt – already the highest per capita in Canada.

Premier Andrew Furey and Finance Minister Siobhan Coady were in London Monday to ring the opening bell at the city’s stock exchange, on which the government is looking to sell up to one billion euros’ worth of bonds.

Furey said the government launched the borrowing program to expand its financing options and secure better interest rates.

“We recognize the high cost of borrowing as being incredibly punitive, and we’re taking every measure to try to lower that,” he told reporters, adding, “We’re not here because we need to be here. We’re here because we want to be here, and it’s the right and responsible thing to do.”

According to Statistics Canada, Newfoundland and Labrador had a net debt per capita of $19,478 in 2021, the highest in the country. The government has long struggled to balance its books, as the costs of delivering services to one of the country’s most sparsely populated provinces have often outweighed revenues.

The province’s debt sits at about $16 billion, and the government budgeted about $1.1 billion to pay for the interest and other costs associated with it in the current fiscal year, which ends this month, Coady told reporters Monday.

Newfoundland and Labrador borrowed about $1.7 billion in the current fiscal year, she added, down from the $2.7 billion estimated in the budget. The province says it is expecting its first surplus in more than a decade, thanks largely to higher-than-expected tax revenues. Coady said the increase in provincial revenues helped offset borrowing costs.

The province will sell its debt on the European market only if the cost of borrowing is lower than it is on Canadian markets, Coady added. And to reduce rate risks associated with currency exchanges, any bonds sold will be hedged to Canadian fixed rates, officials said.

Like most provinces, Newfoundland and Labrador raises money to cover its debt by issuing publicly traded bonds, which can be bought by institutional investors, including banks and pension funds. The province has listed bonds on the Canadian market and, as of Monday, it can also list bonds on the European market.

“We’re not obliged, because we’re here, to sell the bonds to the European market,” Furey said. “This just provides optionality … It’s no different than if you had a mortgage, or you were about to get a mortgage, and you wanted multiple different options available to you.”

He said government officials were in Europe last fall to meet with investors and begin the legal process to register with the stock exchange. The listing makes Newfoundland and Labrador the ninth province to enter the European markets, he said; Prince Edward Island is the only province that hasn’t yet done so.

Furey said with new energy projects on the horizon, the province is in a good position to attract European investors to its bonds and private sector.

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