Corporate debt attracts heavy foreign investment: StatsCan

Foreign investors piled into Canadian securities once again in September, driven by a surge in the buying of corporate debt, according to Statistics Canada.

New data from StatsCan finds that international securities transactions generated a net inflow of $2.8 billion in September, as foreign investors added $20.0 billion of Canadian securities — and while Canadian investors acquired $17.2 billion in foreign assets.

Through the first nine months of 2021, foreign investors bought $126.0-billion-worth of Canadian securities, up from $108.7 billion for the same period in 2020.

In September, debt securities were the primary focus, with off-shore investors adding $16.6 billion of Canadian debt securities.

Foreign acquisitions of corporate bonds totalled $26.4 billion, StatsCan reported, noting that marked the largest investment made since April 2020.

“New bonds issued by Canadian chartered banks and denominated in foreign currencies accounted for most of the activity,” StatsCan said.

Yet, at the same time, foreign investors also sold $14.0-billion-worth of Canadian government debt.

That was the largest divestment on record, StatsCan said, saying, “The reduction was mainly in federal debt instruments and followed five straight months of significant investments in these instruments.”

Additionally, foreign investors acquired $3.5 billion of Canadian equities in September.

“Investors mainly targeted shares of the manufacturing, trade and transportation industries,” StatsCan said.

Meanwhile, Canadian investors continued to buy U.S. stocks, adding $13.2-billion-worth in September, up from $9.5 billion in August. Large-cap tech stocks remained the primary focus, the agency said.

Canadian investors also bought $3.4 billion of non-U.S. stocks in the month, and $533-million-worth of foreign debt.

Overall, Canadian acquisitions of foreign securities increased to $17.2 billion in September, up from $15.2 billion in August.

From January to September 2021, Canadian investment in foreign securities totalled $121.6 billion, compared with a divestment of $1.2 billion for the same period in 2020.

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.