Canada to Issue Euro Benchmark Bond to Diversify Foreign Currency Reserves

Canada plans to issue a 10-year euro benchmark bond to further diversify its financing for its foreign currency reserves, with a deal size of at least 1 billion euros. The bond issue is expected to be launched in the near future, subject to market conditions, and will finance the Exchange Fund Account, which manages the Canadian dollar's value and foreign currency liquidity. Analysts downplayed the possible currency market implications of the deal, stating that it is more about staying on the radar of international bond investors and diversifying foreign currency reserves.

Key Takeaways:

• Canada plans to issue a 10-year euro benchmark bond, its second foreign bond of the fiscal year, to further diversify its financing for its foreign currency reserves.
• The deal is being lead managed by BNP Paribas, Credit Suisse, Deutsche Bank, and HSBC, and is expected to be priced later this week, most likely on Thursday.
• The bond issue will finance the Exchange Fund Account, which manages the Canadian dollar's value and foreign currency liquidity.
• Analysts downplayed the possible currency market implications of the deal, stating that it is more about staying on the radar of international bond investors and diversifying foreign currency reserves.
• Canada has not issued a foreign-denominated bond between early 2001 and late 2009, largely because it was running budget surpluses and had an ample outstanding balance of foreign-denominated debt from earlier auctions.
• The sudden return to deficits in Canada has made for a natural catalyst, and has encouraged a return to foreign-denominated issuance in an effort to keep foreigners familiar with -- and thus receptive to -- the Canadian product.
• Eric Lascelles, chief economics and rates strategist at TD Securities, noted that market players should not assume the Bank of Canada is about to step into currency markets.
• Last year, Canada completed a $3 billion, five-year bond, in a move to bolster its U.S. dollar reserves and meet International Monetary Fund obligations.

Statistics:

• The deal is expected to be priced later this week, most likely on Thursday.
• The bond issue will finance the Exchange Fund Account, which manages the Canadian dollar's value and foreign currency liquidity.
• The Canadian dollar's value and foreign currency liquidity will be influenced by the bond issue.
• The bond issue is expected to be benchmark size, at least 1 billion euros.
• Canada has not issued a foreign-denominated bond between early 2001 and late 2009.
• Last year, Canada completed a $3 billion, five-year bond.

Sources:

• Canada said: "Byline: Mamta03"
• Euclid Infotech Pvt. Ltd. Provided by Syndigate.info an Albawaba.com company