The Financial Post reports in its Wednesday, May 12, edition that Canada is borrowing $3.5-billion (U.S.) in its largest sale in the U.S. dollar bond market in more than six years.
A Bloomberg dispatch to the Post reports that unnamed sources say Canada will price five-year bonds to yield six basis points over U.S. Treasuries, in line with its most recent sale in January, 2020.
Sources say the transaction received more than $7-billion (U.S.) of orders.
The Department of Finance said in an statement Monday that the "bond provides funds to supplement and diversify Canada's liquid foreign reserves." Canada is returning to the international debt markets for the first time since the start of the pandemic as its central bank adopts a relatively hawkish tone.
The Bank of Canada reduced the pace of its government bond purchases last month, and plans even less intervention later this year, say unnamed analysts.
Laurentian Bank of Canada economists Sebastien Lavoie and Dominique Lapointe say the BOC cut its federal government bond purchases by $1-billion (Canadian) to $3-billion (Canadian) per week in April, and may slow to $2-billion (Canadian) at its July monetary policy meeting and $1-billion (Canadian) in September.
© 2021 Canjex Publishing Ltd. All rights reserved.