Debt markets thawing

TORONTO — The Canadian short-term debt market is undergoing a spring thaw, credit rating agency DBRS says, after “the concerted efforts of the world’s central banks and the G20 to provide liquidity and restore confidence clearly had the intended effect.”

TORONTO — The Canadian short-term debt market is undergoing a spring thaw, credit rating agency DBRS says, after “the concerted efforts of the world’s central banks and the G20 to provide liquidity and restore confidence clearly had the intended effect.”

The freeze-up of the commercial paper market in the summer of 2007 was among the first clear signs that the long debt-propelled global economic expansion was coming to grief, and now DBRS said in a study released Wednesday that the market for short-term debt securities shows signs of reviving.

“Early evidence through the first quarter of 2009 would indicate a thawing in the Canadian commercial paper market, as investors again begin to cautiously search for yield and to diversify credit exposure,” stated DBRS co-president Peter Bethlenfalvy.

This renewed appetite remains largely confined to short-term debt securities from governments, banks, and “corporations with strong fundamentals and liquidity support,” he added.

Canadian corporate short-term debt issues have increased by $1.1 billion since December, “and evidence is accumulating that current demand is outstripping supply, which may have an impact on pricing in the future,” DBRS stated.

It predicts the overall short-term market in Canada will grow by five to 10 per cent this year after increasing 11 per cent in 2008, with government notes accounting for most of the issuance in both years.

The increased short-term issues by governments “primarily reflects actions taken at the federal level to mitigate the impact of the credit crunch on Canada’s financial institutions, as well as the weakening fiscal results and higher capital requirements in certain provinces,” Bethlenfalvy observed.

The DBRS tally shows corporate commercial paper outstanding declined by 24 per cent during 2008. However, the volume of commercial paper actually swelled 13.8 per cent excluding foreign banks, investment banks and finance companies.

Short-term issues in Canada by foreign financial institutions slumped 90 per cent in 2008, Bethlenfalvy noted, “due to the global credit crunch, the significant deterioration of asset quality and the retrenchment to home markets globally.”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Eric Rajah and Brian Leavitt were awarded with Meritorious Service Medals by the Governor General for co-founding the Lacombe-based charity A Better World. which reduces poverty and boosts education in Africa and Afghanistan. (Contributed photo).
Co-founders of Lacombe-based charity receive one of Canada’s highest honours

Eric Rajah, Brian Leavitt of A Better World are honoured by the Governor General

(BLACK PRESS file image)
AHS warns parents to keep button batteries away from small children

Some kids swallowed the small cells and were hospitalized

Many rural seniors are having to travel a long way to get vaccinated against COVID-19. Stettler residents are being told to go to Red Deer, Drumheller or Camrose. (Black Press file photo).
Rural central Alberta seniors have to travel far to get vaccines

Stettler residents are being directed to Red Deer, Drumheller or Camrose clinics

Hölmetrics CEO and co-founder Chad Verity said the Red Deer area could become a tech hub. (By SUSAN ZIELINSKI/Advocate staff)
Red Deer-area tech company attracts international attention

Focusing on economic diversity in Red Deer region

The Red Deer Public Library downtown branch will likely not reopen as quickly as other branches because work needs to be completed on its HVAC system replacement. (File photo by ADVOCATE staff)
Preparation work begins on reopening Red Deer’s libraries

CEO hopes to know more about reopening dates later this week

Red Deer dogs Bunsen and Beaker helped save a missing pet recently. The two dogs have more than 80,000 followers on Twitter. (Contributed photo)
WATCH: Red Deer science dogs help save lost pet

Red Deer science-communicating dogs Bunsen and Beaker helped rescue a missing pet… Continue reading

A nurse assistant prepares a dose of the Oxford-AstraZeneca vaccine for COVID-19 during a priority vaccination program for health workers at a community medical center in Sao Paulo, Brazil, Wednesday, Feb. 3, 2021. THE CANADIAN PRESS/AP-Andre Penner
Split over AstraZeneca vaccine sparks questions on who will get it as variants spread

OTTAWA — Canada’s chief public health officer says new COVID-19 cases are… Continue reading

Banana bread (file photo)
Calgary not-for-profit going bananas trying to off-load pallets of fruit

CALGARY — It’s been bananas at a Calgary not-for-profit as it tries… Continue reading

Image courtesy Creative Outlet
Edmonton chiropractor admits to sexually assaulting six female patients in 1980s

EDMONTON — A chiropractor has admitted to sexually touching six of his… Continue reading

Alberta Minister of Health Tyler Shandro addresses a news conference in Calgary on May 29, 2020. THE CANADIAN PRESS/Jeff McIntosh
Alberta may follow B.C.’s lead on faster rollout of first COVID-19 dose

EDMONTON — Alberta’s health minister says the province is considering whether to… Continue reading

A locally-produced video project aims to preserve Canada’s railway history

‘Railways have been an integral part of Canadian history since 1836’

Ryan Jake Applegarth of Ponoka, 28, is scheduled to appear at Ponoka Provincial Court on March 12, 2021. (File photo)
Discussions about justice continue as Ponoka murder victim’s case proceeds

Reaction to comments Ponoka Staff Sgt. Chris Smiley made to town council last month

Dr. Stanley Read
Hometown Bashaw doctor recognized with alumni award for AIDS work

Dr. Stanley Read, born and raised in Bashaw, is considered a global health leader

A nurse assistant prepares a dose of the Oxford-AstraZeneca vaccine for COVID-19 during a priority vaccination program for health workers at a community medical center in Sao Paulo, Brazil, Wednesday, Feb. 3, 2021. THE CANADIAN PRESS/AP-Andre Penner
COVID-19 cases start to climb again as variants spread, in step with dire forecasts

OTTAWA — Canada’s chief public health officer says new COVID-19 cases are… Continue reading

Most Read