Canadian bond issuers rush ahead of U.S. debt ceiling deadline
BNN Bloomberg
Corporate issuers are racing to sell debt denominated in Canadian dollars as the standoff around the U.S. debt ceiling continues and investors look to lock in the highest yields since November.
Bank of Montreal is leading five issuers raising $4.75 billion (US$3.49 billion) in the Canadian dollar bond market this week, according to data compiled by Bloomberg. That’s the most since the second week of January, when five companies priced $5.5 billion in new bond deals.
Tensions around the U.S. debt limit ratcheted higher after Fitch Ratings on Wednesday warned the nation’s AAA grade might be under threat. Meanwhile, all-in yields in the Canadian corporate bond market reached 5.247 per cent on Wednesday, the highest since early November, according to Bloomberg indexes.
That’s not all that’s encouraging companies to tap the loonie market now: Traders are betting on at least one additional rate hike by the Bank of Canada this year, which is set to hold its next monetary policy meeting on June 7.
