Canadian Companies Issue Bonds At Record Pace As Economy Reopens

Canadian companies are on pace to sell a record number of bonds this year, taking advantage of low rates to refinance and fund post-pandemic investments.

Nearly $78 billion of bonds have already been issued this year by Canadian companies, more than 70% of the record $111 billion sold in all of 2020, according to data compiled by Bloomberg Markets.

Bankers forecast a new high for bond sales this year despite a slower pace through year-end as borrowers shift from stockpiling liquidity to rightsizing balance sheets and protecting ratings.

The yield on the Barclays Canada Corporate Bond index has been in a 2.04% to 2.18% range since mid-March, with an increase in government yields offset by tighter spreads.

There’s at least $197 billion of pending or completed merger and acquisition deals involving Canadian companies using cash or financing, up from $167 billion last year.

Among the largest deals this year is Rogers Communications (T.RCI.B) acquisition of Shaw Communications (T.SJR.B), and Brookfield Infrastructure Partners (T.BIP.UN) hostile bid for Inter Pipeline (T.IPL) that could derail a friendly all-stock offer from Pembina Pipeline Corp (T.PPL).

The second half of the year is typically less busy than the first in Canadian-dollar corporate issuance, partly due to holidays.