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Canada: Have Foreigners Lost Their Appetite For Our Bonds?

ByThe National Bank of Canada
Published 08/19/2012, 04:12 AM
Updated 05/14/2017, 06:45 AM

Foreigners reduced their holdings of Canadian bonds by $7.9 billion in June, the biggest net outflow since December 2008 when the global credit crisis was in full swing. What’s the cause of this massive outflow? For the most part, it was the massive retirements of maturing instruments backed by the Federal government. NBF estimates that about $19 billion of CMBs and $16 billion of Canada bonds matured in June alone. There was also $2 billion of provincial debt and $5 billion of corporate paper retired that matured during the month. Needless to say, foreigners were significantly impacted by this development.

As today’s Hot Chart shows, a record $17 billion of foreign-held Canadian debt was retired on the month (and a record cumulative $38 billion since the start of the year). To offset this, non-residents tapped the secondary and new issue markets aggressively, to the tune of $13 billion in June. This brings cumulative purchases to more than $70 billion since the start of the year. As shown, this is the best performance since 2010. Canadian bonds are not losing in popularity with foreigners.
Have foreigners lost their appetite for our bonds

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