Yesterday, the Government of Canada issued a 5-year US$3.5 billion global bond.
Issuing a global bond provides funds to supplement and diversify Canada’s liquid foreign reserves. Liquid foreign reserves are a source of prudential liquidity and promote orderly conditions for the Canadian dollar in foreign exchange markets.
The investor base for the 5-year bond issue includes a wide range of central banks, other official institutions, and foreign-based investment funds across the globe.
The issuance of a global bond is in line with the commitment that the government reiterated in Budget 2021 to maintain liquid foreign reserves at or above 3 per cent of nominal gross domestic product.
Yesterday, the government issued a US$3.5 billion global bond at 6 basis points over the 5-year US Treasury maturing on May 19, 2026.
The issuance received strong demand from investors in North America, Europe, and Asia, as indicated by an order book that was in excess of US$7 billion.
Thanks to strong demand, this global bond issuance priced more tightly than any of the 5-year US dollar bonds issued by Canada’s peers in recent history.
The bond transaction will provide cost-effective and diversified funding for the liquid foreign reserves held in the Exchange Fund Account.
The Government of Canada last issued a US-dollar bond in January 2020 worth US$3 billion.