Exclusive: Canadian DMO: No Plans to Issue More USD, Other Foreign Currency Bonds in 2025

27 March 2025

By Marta Vilar – MADRID (Econostream) - Canada is not expecting to deliver another USD bond issuance in 2025 after ‘great success’ of the transaction on March 11, according to Matthew Emde, Director General of Funds Management at the Canadian Department of Finance.

In an interview with Econostream on March 13 (transcript here), Emde said that the issuance of a 5-year $3.5 billion global bond earlier in the week was ‘a great success’.

‘It was the biggest book we've seen in 15 years, at $13.9 billion’, he said, highlighting the ‘very high quality’.

‘We were able to tighten pricing by 3bp during the deal and, in fact, pricing was among the tightest 5-year deals for peers since the beginning of 2025’, he added.

The transaction was considered to be ‘standard’, according to Emde, as the Canadian DMO typically issues one global bond per year under its foreign reserve portfolio.

‘[W]e go sometime between January and the spring’, he said. ‘It’s slightly opportunistic in the sense that we’re looking for good market conditions, however, our consistency in issuance leads the market to expect our issuance in this timeframe.’

There were currently no plans to tap this market again, he indicated, but the Department of Finance was ‘always attuned to market conditions.’

Asked if any other foreign currency issuances should be expected in 2025, Emde said such options could be considered but were not expected as of now.

The strong demand and tight pricing seen in this transaction demonstrated that investors continued to trust Canada’s finances, he argued.

A trade war with the US would have an uncertain impact on the Canadian economy, which nonetheless had ‘strong fundamentals’ in addition to a ‘sound fiscal position’ and a ‘resilient economy’, he said.

‘[T]here's a lot of uncertainty facing our economy, but as I've been saying, our institutional strengths, strong economic backdrop and relatively low cost of borrowing will support investor confidence in Canada debt and will continue to support our credit rating’, he said.

The impact of trade tensions with the US on the Canadian economy would depend on the duration, size and scope of the tariffs, he said.

‘If they're long-lasting 25% tariffs on all Canadian exports to the US, it's clearly going to have a significant impact, probably like Bank of Canada Governor [Tiff] Macklem has said, tipping Canada into a recession’, he said.

The end of quantitative tightening, which was expected to be soon, as announced by the Bank of Canada, would have no material impact on Canadian debt, according to Emde.

Asked if they would deliver any bond buybacks in 2025, he said that they were not expecting a change in the current buyback programme, which was ‘very targeted’ and used to manage government cash flows prior to large bond maturities.

Neither were there any plans to reverse the cancellation of the inflation-linked bond programme, he said.

‘I'd say at this point the bar is high for it to be reopened’, he said. ‘We're not actively considering it.’