Safe Canadian debt market draws more foreigners

Discussion in 'Economics' started by Kassz007, Jul 18, 2011.


    "Foreigners -- mainly Americans but also increasingly British and Asian investors -- more than doubled their investment in Canadian bonds in May from April, Statistics Canada said on Monday.

    This helped boost overall securities purchases to their highest level in a year at C$15.44 billion ($16.08 billion), compared with C$8.52 billion in April. In May last year, foreign purchases of bonds, stocks and short-term money market paper reached C$22.88 billion."

    "The interest in Canadian dollar-denominated bonds is not new, with foreigners investing record amounts in the market last year, but it appears to be gaining even more momentum, said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets.

    "It's gained speed since May with the worries of European sovereign debt as well as U.S. debt ceiling wrangling, but really this has been going on since 2008," he said."

    "It's hard to imagine what's a risk-free rate, people are now asking around the world. Canada is seen as having stress-tested the financial system through the crisis and now on the debt side of things," he said.

    Canada's exposure to peripheral Europe is minimal, and largely indirect through U.S. banks. Its bond market is about three times as liquid as that of Australia, also a tripe-A rated country outside Europe.

    Net new bond issues by the Canadian government reached a two-year high in May and long-term interest rates were down 19 basis points, according to Statscan
  2. Is that Kazz under Mark Carney's desk?
  3. As a Canadian, I find this worrisome.