Digging for Opportunity in Canadian Corporate Bonds

Whichever way you slice it, 2017 was a busy year for Canada’s corporate bond market, as corporate issuance in Canadian dollars set a new record with nearly $200 billion raised. What’s happening now? We check in with Thomas O’Gorman and Adrienne Young for their views on the shape of things to come.

Q: What’s the current backdrop for Canadian corporate bonds? Adrienne Young: Canadian corporate bonds are expensive at the moment for many reasons, including supply and demand pressures in our relatively small market. Given the historically low interest rates of the past several years, institutional bond investors are scouring the world for places to put their money, increasing demand for Canadian corporate bonds. Meanwhile, Canadian bond issuers, such as the major banks, are finding international markets like Asia, Europe and the United States appealing for new issuances. This siphons capital away from our market. The resulting supply/demand imbalance is contributing to tight markets.

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