Skip to main content

Investment Ideas Canada plans U.S. dollar global bond issue to pad FX reserves

Canada is planning to issue a global bond denominated in U.S. dollars later this week, subject to market conditions, the country’s Department of Finance said on Wednesday.

Issuing a global bond provides funds to supplement and diversify Canada’s foreign exchange reserves, the government said.

“Diversification of funding sources is key,” said Hosen Marjaee, a senior portfolio manager at Manulife Asset Management. “They like to keep that channel open by having issues outstanding and every once in a while going to the market.”

Story continues below advertisement

One of Canada’s global bonds, with $3-billion outstanding, is due to mature on Feb. 27, according to Refinitiv data.

If the forthcoming issue is left unhedged, it could be more expensive for Canada to issue in the U.S. market than to issue in Canadian dollars. Yields on U.S. Treasuries trade more than 60 basis points higher than yields on Canadian government bonds.

“There is a bit of a cost involved but at the same time the U.S. dollar is a little bit cheaper now than it was a couple of months ago,” Mr. Marjaee said.

The Canadian dollar has rallied nearly 3 per cent against the greenback since the beginning of 2019.

Canada is one of the few countries with an undisputed triple A credit rating, so its bonds tend to be greatly sought after by international investors.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter