Bond activity strong in 2004

(February 22, 2005) The fourth quarter of 2004 was marked by exceptionally strong activity in bond financings, according to the IDA’s latest quarterly Review of Debt New Issues and Trading.

Total bond financings reached $49 billion in Canada, an increase of 42% from the third quarter. The strong fourth quarter propelled 2004 into the record books, with full year bond issuance topping $165 billion, breaking the record set in 2003 by 12%.

Total bond trading for the year reached $5.5 trillion, an increase of 7% from 2003, but falling just shy of the $5.6 trillion record set in 1997. The vast majority of that total consisted of Government and Federal Crown Corporation bonds, which made up $4.9 trillion.

The government issued $16 billion in new bonds in the fourth quarter, with full-year debt financings hitting $61 billion.

Trading in provincial bonds increased 31% in the fourth quarter to a record $113.6 billion and totaled $397 billion for the year, up 20% from 2003 levels. Total issuance by the provinces topped $9.8 billion in the quarter, with Ontario accounting for 70% of the issues worth more than $500 million.

Corporate debt accounted for $59.5 billion in new issues for the year, with a record $21 billion coming in the fourth quarter, a dramatic 90% increase from the third quarter. Trading in corporate bonds totaled $35.8 billion for the quarter and $225 billion over the full year.

There were 11 bond issues worth in excess of $500 million in the fourth quarter, with Bank of Nova Scotia raising $2 billion in three issues. The bank’s largest single debt issue totaled $900 million. The financial sector accounted for 63% of the total financings in the fourth quarter.

Money market trading fell 3% in the fourth quarter to $1.0 trillion, dragged down by a decrease in corporate paper and Government of Canada T-Bill trading. Money market trading totaled $4.8 trillion in 2004, up 9% from 2003 levels.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com