(Bloomberg) — Magna International Inc., Enbridge Inc. and Ritchie Bros Auctioneers Inc. are among Canadian companies that have moved forward with bond sales in the international and domestic markets, fueling a pickup in the pace of new offerings despite the rise in interest rates.
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Bond sales from Canadian firms in the first eight days of the month reached almost $21 billion, up from over $11 billion in all of February, according to data compiled by Bloomberg. That includes TransCanada PipeLines Ltd.’s sale of a C$2.25 billion ($1.63 billion) domestic bond on Wednesday, one day after it raised $1.25 billion by issuing US-dollar denominated debt, and Toronto-Dominion Bank’s sale of A$2.5 billion ($1.65 billion) of covered bonds in Australian dollars.
The recent jump indicates that capital markets remain robust even as yields jump on expectations that the Federal Reserve will tighten monetary policy further to pull down stubbornly high inflation. On Wednesday, however, the Bank of Canada broke with the Fed, holding its benchmark rate unchanged for the first time in nine meetings.
“There’s a lot of volatility right now in the market, so that may impact client sentiment, but we are seeing what I think we would’ve called constructive volatility,” Nadine Ahn, chief financial officer at Royal Bank of Canada, said in a recent interview. “It’s not that clients are sitting on the sideline.”
Canadian auto-parts company Magna raised the equivalent of $1.6 billion by selling bonds in the euro, dollar and Canadian-dollar bond markets, according to data compiled by Bloomberg. The proceeds of the debt deals are being used to finance the purchase of the Veoneer Active Safety business that was announced in December.
Early this month, Ritchie Bros, a Canadian firm that sells heavy equipment at auctions around North America, raised $550 million in the junk-bond market to help finance its planned acquisition of IAA Inc., which sells damaged and written-off vehicles. On Monday, Enbridge issued $3 billion in the US dollar debt market, including $2.3 billion in sustainability-linked bonds, data compiled by Bloomberg show.
“In general, access to capital today is much better compared to four, five, six months ago, and I suspect that our clients feel the same way,” said Bank of Montreal’s chief financial officer Tayfun Tuzun. “I’m not anticipating necessarily a full normalization, but I’m in general anticipating a more conducive environment than what we saw in the second half of 2022.”
(Adds terms of TD covered bond sale in second paragraph)
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