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The Canadian corporate bond market is closely linked with the U.S. market and has adopted most of the U.S. market_s structures, practices, and institutional arrangements. The Canadian bond market became increasingly integrated with the U.S. market in the 1990s.
The Canadian bond market has two distinctive features that influence whether a Canadian firm issues bonds in the U.S. or Canada. First, the Canadian HQ bond market is mature, but the domestic LQ market is still in infancy and only accounts for about three percent of the annual corporate debt issuance in Canada. The Canadian LQ firms receive financing primarily through bank loans, private placements, and income trusts, and therefore, are likely to be more credit constrained than HQ firms. Freedman and Engert (2003) find that high-yield Canadian borrowers meet almost all of their financing requirements in the deep and liquid U.S. high-yield bond market.
Second, the Canadian bond market is also shallower than the U.S. market as the demand-side factors limit the size of a bond issue that can be successfully placed in Canada. The Canadian bond market is also less liquid than the U.S. market. Because most Canadian investors follow a buy-and-hold investmentstrategy, the secondary market trading of corporate bonds is thin for all corporate bonds. Thus, to issue large size bonds that cannot be easily absorbed in the domestic market, Canadian firms have to go to the U.S., regardless of their credit quality.
|12/05/2021||New bond issue: Canada issued international bonds (US427028AB18) with a 0.75% coupon for USD 3,500.0m maturing in 2026|
|11/05/2021||Upcoming issue: Canada|
|20/04/2021||Upcoming issue: Canada|
|20/11/2020||Moody's Investors Service affirms Canada at "Aaa" (LT- foreign currency credit rating); outlook stable|
|20/11/2020||Moody's Investors Service affirms Canada at "Aaa" (LT- local currency credit rating); outlook stable|