Canada’s High-Yield Bond Market Is Suddenly the Hottest in Years

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The often-overlooked Canadian high-yield debt market is having a moment, as companies pile in to sell debt and investors look to lock in coupons before central bank monetary policy easing takes hold.

Eddy Gifford, wealth advisor of TACTIVE, joins BNN Bloomberg to talk about buying long term treasury bonds.

The high-yield frenzy is feeding investors who have been pouring money into increasingly risky assets to soak up yields, a trend that’s likely to accelerate as the Bank of Canada goes further down the path of interest rate cuts and the Federal Reserve follows with its own easing. Junk bond issuers have moved to “accelerate funding plans, opportunistically refinancing existing debt and extend maturity profiles,” said Rob Brown, co-head of debt capital markets at Royal Bank of Canada.An inverted yield curve — where short-term debt is more expensive than long-term — for most of the year has also incentivized sellers to term out short-dated bank debt into the high-yield market, according to Brown and his co-head at RBC, Patrick MacDonald.

 

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