Canada Companies Look South to Issue Debt

The video discusses the trend of Canadian companies increasingly issuing bonds in the US market due to its larger size and lower costs. This shift is driven by liquidity and cost advantages, impacting Canadian investors who face challenges in accessing new issuances. The video also explores potential changes in 2017, influenced by the Federal Reserve's interest rate decisions, which may alter the cost dynamics between the US and Canadian bond markets.

Why are Canadian companies increasingly issuing bonds in the US market?

• The US market is smaller and less liquid.

• Issuing bonds in the US is more expensive.

• The US market offers greater liquidity and lower costs.

• Canadian regulations are more favorable.

What challenge do Canadian institutional investors face due to increased US bond issuance?

• They have more opportunities to buy new bonds.

• They miss out on the initial benefits of new issuances.

• They can easily access the primary market.

• They benefit from higher interest rates.

How does the initial 'pop' in bond sales compare to the IPO market?

• It only affects Canadian investors.

• It is more significant than in the IPO market.

• It is similar, as both offer initial benefits to early investors.

• It is unrelated to the IPO market.

What is a potential reason for Canadian companies to reconsider issuing bonds domestically in 2017?

• The Canadian market is shrinking.

• Canadian companies have no fiduciary responsibilities.

• The Federal Reserve's interest rate policies may change.

• US investors are losing interest in Canadian bonds.

What might happen if the interest rate gap between the US and Canada shrinks?

• The US bond market will shrink.

• Canadian companies will stop issuing bonds altogether.

• US companies will issue more bonds in Canada.

• Canadian companies may find it cheaper to issue bonds in Canada.