Investors and their advisors looking for yield in 2013 should pay close attention to foreign corporations draping themselves in the maple leaf.
That’s according to Richard Usher-Jones, vice president of Richmond Hill, Ont.-based Canso Investment Counsel Ltd., who spoke Wednesday at a Pembroke Private Wealth Management presentation in Toronto.
Corporate bonds performed strongly last year, particularly “maple bonds,” Usher-Jones said, and he expects that trend of strong corporate bond yields to continue into 2013.
“We still see very good value certainly in corporate bonds,” Usher-Jones said, “and, as a subset of corporate bonds, “maple bonds” as well.”
Maple bonds are bonds issued by foreign entities on the Canadian bond market in Canadian dollars. While this can include foreign governments, Usher-Jones and his research team at Canso are interested primarily in corporations, such as European banks (including Lloyds Bank Group plc and the Royal Bank of Scotland Group plc) and Goldman Sachs.
Usher-Jones said these types of bonds are a good fixed-income investment because they offer higher yields than their domestic counter-parts. “We’re able today to buy higher quality bonds at higher yields,” said Usher-Jones, “than we would with a similar quality issuer in the Canadian market.”
Of course, there are still options for those seeking yield from Canadian companies. Telecommunications corporations, such as Shaw Communications Inc. and Rogers Communications Inc., said Usher-Jones, are also offering really good yields.