Investors flock to foreign bonds: StatsCan

Canadian investors stampeded into foreign bonds in February, while offshore investors curbed their holdings of Canadian securities, according to new data from Statistics Canada.

The national statistics agency reported that investors added $24.2 billion of foreign securities in February, driven by record $16.3 billion worth of foreign bond acquisitions, including $9.1 billion of U.S. government bonds.

At the same time, Canadian investors also added $9.1 billion in U.S. equities in February, led by large-cap tech stocks. And investors sold off $2.7 billion worth of non-U.S. equities.

During the month, foreign investors also reduced their Canadian securities exposure by $8.8 billion, led by a record $15.1 billion divestment in government paper, including $11.8 billion of federal debt and $3.3 billion worth of provincial debt.

The record divestment of government debt in February came on the heels of a record ($15.5 billion) drop in foreign holdings of Canadian corporate debt in January, StatsCan noted. That drop was partly reversed in February, as foreign investors added $13.3 billion worth of corporate bonds during the month.

At the same time, foreign investors reduced their Canadian equity holdings by $2.7 billion in February.

“The divestment was in nearly all sectors except for the banking sector, which saw a foreign investment of $3.0 billion,” StatsCan said.

Overall, the surge in buying of foreign securities by Canadian investors, combined with foreign investors reducing their exposure to Canadian securities, generated a net portfolio outflow of $33.0 billion from the Canadian economy in February, StatsCan said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.