The Canadian government will launch a U.S.-dollar-denominated global bond on Tuesday, subject to market conditions. The launch provides funds to supplement and diversify Canada’s liquid foreign reserves.
The country’s liquid foreign reserves serve as a source of prudential liquidity and help promote orderly market conditions for the loonie in foreign exchange markets.
“This U.S.-dollar global bond will further strengthen the stability of Canada’s foreign currency reserves while meeting investor demand for high-quality assets backed by Canada’s triple-A credit ratings from most major credit rating agencies,” the Department of Finance said in a release.
In the 2024 federal budget, the government reiterated its commitment to maintain liquid foreign reserves at or above 3% of nominal GDP.
The budget estimated net funding requirements for 2024–25 for the reserves to be US$11 billion but may vary because of movements in foreign interest rates and exchange rates. A mix of sources will be used, along with the issuance of global bonds.