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UPDATE 1-Canada taps U.S. dollar global bond market for first time since pandemic

05/11/2021 14:35
UPDATE 1-Canada taps U.S. dollar global bond market for first time since pandemic

Adds details of offering, background, byline

By Fergal Smith

- Canada has tapped an international bond market for the first time since before the coronavirus crisis, selling $3.5 billion of a 5-year U.S. dollar global bond, a term sheet showed on Tuesday.

The bond was priced at 6 basis points over the U.S. Treasury benchmark, matching the spread achieved for Canada's last global bond issue in January 2020. The bond pays a coupon of 0.750% and matures on May 19, 2026.

Canada has borrowed heavily since the start of the crisis to finance historically high budget deficits. Its issuance is mostly in Canadian dollars.

Canada's total market debt is projected to climb to C$1.3 trillion ($1.08 trillion) in the fiscal year ending next March, up about 80% since before the crisis, while debt as a share of GDP is set to climb to 51.2%, its highest since 1999, a budget document last month showed. nL1N2M730N

Fitch Ratings stripped Canada of one of its coveted triple-A credit ratings last June but S&P Global Ratings and Moody's Investors Service still give Canadian debt the highest rating. nL4N2E13N1

The Bank of Canada has been buying government bonds in the secondary market to help lower domestic borrowing costs. Last month, it cut the pace of purchases to C$3 billion a week from C$4 billion.


($1 = 1.2086 Canadian dollars)


(Reporting by Fergal Smith; editing by Jonathan Oatis and Richard Chang)

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