Canada

The European Investment Bank delivered 2020’s first Sonia bond on Wednesday, adding to a streak of hot deals in sterling. The second Sonia deal is set to follow on Thursday.

Canadian financial institutions could be heavy users of the dollar bond market in 2020, though supply from high-grade bank and finance borrowers is otherwise expected to fall again, as firms enjoy comfortable capital and debt buffers.

Multiplex cinema chain Cineworld is betting on rapid expansion as it pours more billions into another North American acquisition. Cineworld, which is among the most shorted companies in the UK, plans to acquire Canadian competitor Cineplex in a $2.1bn deal financed by debt. This plan comes nine months after it made a $3.6bn acquisition in the US.

For public sector issuers, niche currency deals have offered attractive opportunities for arbitrage funding, with spreads into euros and dollars spurring on demand this year. Meanwhile, strong investor appetite for green paper has seen niche shoots blossom throughout 2019. Frank Jackman reports

Navigating the covered bond market will not be without its challenges in 2020. The Targeted Longer Term Refinancing Operation (TLTRO), European Central Bank deposit tiering and the Covered Bond Purchase Programme have collectively distorted the market, but added to this concoction is the impact of negative interest rates. Against this backdrop issuers, investors and investment bankers gathered in Munich in November to discuss the outlook for covered bonds. It is likely that new issue premiums will gradually tighten, but the path is unlikely to be smooth. January is typically the busiest month, but in 2019, issuers that funded this early paid the highest spreads. And, with the ECB expected to buy in the region of €4.5bn covered bonds a month, issuers will not feel compelled to move early. But the ECB monetary policy has unwelcome implications. Covered bonds have begun to lose value against government bonds, and this will extend if the ECB is unable to loosen restrictions on government bond purchases.

Indian Oil Corp’s Canadian subsidiary, IndOil Montney, has returned to the loan market for a C$580m ($438m) five year deal. Unlike the last time, when it was primarily focusing on US and Canadian banks, the latest deal is targeting Asian liquidity.

Three Chinese banks have provided Jiangxi Copper Company with a $700m loan to support its acquisition of Canada’s First Quantum Minerals (FQM).

The Province of Alberta was downgraded by Moody’s this week, because of its reliance on fossil fuel energy as it struggles with a lack of pipeline capacity and volatile oil prices, report Burhan Khadbai and Frank Jackman.

National Australia Bank returned to the Canadian dollar market for the first time in over nine years this week to place the largest ever Maple callable tier two, and the first since global financial crisis.

Moody's downgraded the Province of Alberta a notch on Tuesday with the rating agency blaming a “structural weakness” in the region’s economy through its dependence on non-renewable energy such as oil.

Bank of Nova Scotia returned to the sterling market for the first time in more than a year on Wednesday, when it sold its first total loss-absorbing capacity (TLAC) compliant senior bonds in the currency a day after reporting its full year results.

Economies like Canada and Australia that rely upon carbon dioxide-heavy industries are well placed for establishing transition bonds in the SSA market. Having already blazed the trail for green bonds and new risk-free rate linked paper, it is time for SSA issuers to establish transition bonds as a public sector instrument.