Tuesday, May 01, 2007
Rise of the Loonie
I have had a sense that the Canadian dollar was going to become a dark horse contender for global business currency. The Canadian economic (Oil exporter) and political (Boringly stable) situations seems to me that they would encourage the adoption of the loonie (A colloquialism for $CDN). However, I have been a bit hesitate to admit this analysis since I was afraid I was being blinded by a bit of patriotism.
It seems I may be on to something. The Globe and Mail had an article today about the rise of maple bonds (Bonds issued in Canadian dollar). It notes that Canada has a number of factors that favour it:
Now the total is still much smaller than debt issued in American dollars, But the growth rate is large.
This is a trend that will be worth following.
It seems I may be on to something. The Globe and Mail had an article today about the rise of maple bonds (Bonds issued in Canadian dollar). It notes that Canada has a number of factors that favour it:
Canada's supremacy as the capital market of choice for companies as diverse as New Zealand's Telecom Corp. and Iceland's Kaupthing Bank has a lot to do with the federal government's obsession with balanced budgets, some of the lowest interest rates available anywhere, a sinking currency against the euro and a two-year-old law that lets pension funds own as much foreign debt as they want without a tax penalty.
Now the total is still much smaller than debt issued in American dollars, But the growth rate is large.
While the $21.3-billion of so-called Maple bonds represent 10 per cent of the Yankee debt sold by international issuers in the United States last year, the Canadian market is growing twice as fast and may exceed $50-billion in 2007.
This is a trend that will be worth following.
