Cheap Borrowing Migrates to Canada

By Andrew Willis

The massive new bond issues coming from Canadian financial institutions speak to the fact that the Street sees this era as a cheap time to borrow.

Bank of Nova Scotia (BNS) stepped forward on Friday with a $1-5 billion sale of five-year notes. The debt featured a 3.35% interest rate, or 66 basis points over the comparable Government of Canada bond. Subsidiary Scotia Capital led the underwriting.

Banks have accounted for 24% of all corporate bond issues in Canada so far this year, according to data gathered by Desjardins Securities. Insurers made up an additional 9% of fixed income deals. These two sectors account for six of the 10 largest bond issuers. In all, corporate Canada has sold $46.9 billion of bonds in the domestic market.

Comments

[Donald Ingram:]

This amount of bond sales is peanuts when compared to the recent issue by China or by the amount of QE issued by the U.S. With such a small amount issued to date, the security and stability is what the purchaser is attracted to. Like the recent government of Alberta issuance recently that sold out within a few minutes of opening.
Attractive returns with security brings some measure of 'peace of mind' to the purchaser.

Nov 16 01:48 PM

[auto44:]

You mean Canadian banks can't get money from their gov't for free? Man what a concept!!!!!!!!!!!!!!!1

Nov 17 07:10 PM

[Northern Da...:]

On Nov 17 07:10 PM auto44 wrote:

> You mean Canadian banks can't get money from their gov't for free?
> Man what a concept!!!!!!!!!!!!!!!...

Hard as it is to believe, no Canadian banks have needed any. They aren't in the business of borrowing money from the government and thereby strapping the Canadian taxpayers with gigantic losses. Canadian banks are in business to make money, not steal it. So far, they've been firing on all cylinders for over a century and no Canadian taxpayer has yet been robbed by a bank... except for the exorbitant user fees they charge. That's about the only excuse Canadians have to be pissed off at their banks.

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Dec 02 11:45 PM