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International Issuers Look to Canada to Get Bond Deals Done, says RBC Capital Markets Conference
Toronto, Canada (ots/PRNewswire) -
- Removal of Foreign Investment Limits Has Created a Global Canadian Bond Market
This week, RBC Capital Markets held a forum for American and European bond issuers and Canadian institutional investors with a new and larger interest in capitalizing on changes in the Canadian bond market. These changes arise from the elimination in 2005 of the 30 per cent foreign investment limit on Canadian pension and retirement savings funds.
"Issuers are looking to Canada to get international bond deals done," said Larry Bates, RBC Capital Markets' head of debt capital markets in Canada. "Until last year, many Canadian investors were severely restricted in their ability to buy bonds issued by U.S. and European issuers, and thus, severely constrained in their search for diversification. For the first time in more than thirty years, large pools of domestic funds can look offshore for investment opportunities. And this is a very healthy turn of events for issuers."
Indeed, through the first five weeks of 2006, the Canadian bond market has seen CAN$3.5 billion in new issues by U.S. and European issuers, compared to CAN$1.5 billion for the same period last year (prior to the elimination of the foreign investment limit).
"In a very short period of time, we've seen significant growth in Canadian bond issues by foreign borrowers," said Mr. Bates. "There is no doubt in my mind that we'll see that growth continue. This is all about the globalization of the Canadian bond market."
The RBC Capital Markets Canadian Bond Conference, held in Toronto and Montreal this week, connected more than 80 institutional investors with more than 30 bond issuers from the U.S. and Europe.
Mr. Bates recalled that when the federal government abolished the foreign investment limit in 2005, there was speculation that Canadian dollar bonds would suffer as investors looked abroad for investments. "The opposite has occurred," he said. "The global search for diversification has meant that foreign issuers see real advantages in issuing debt in Canada. The cost of funds in Canada is comparable to what can be achieved in other markets plus borrowers are able to access a new investor base."
About RBC Capital Markets
RBC Capital Markets is the corporate and investment banking arm of RBC Financial Group, the global brand name of Royal Bank of Canada (TSX: RY, NYSE: RY), one of the largest banks in North America by assets and market capitalization. RBC Capital Markets is ranked by Bloomberg as one of the top 15 investment banks globally, and has significant debt origination, sales and trading and foreign exchange businesses that operate around the world. Our North American equity underwriting; sales, trading and research business dominates the Canadian market and has established a significant franchise in the US middle market. Both institutional and retail investors recognize RBC Capital Markets for our expertise across the complete range of structured products.
ots Originaltext: RBC Financial Group and RBC Capital Markets
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