podcast
1:20 – Why the province of Alberta issued a benchmark euro-denominated bond. The unique qualities of the bond.
- Alberta has a lot more debt than they used to:
“Within their debt management programs, they have to borrow about 15 billion CAD per year at the moment which is a significant amount, so when they can issue in other currencies, it alleviates the pressure on the Canadian market.”
- Benchmark size made the issuance attractive to investors:
“Benchmark in this case is a bond market term meaning large and liquid. It was 2 to 2.5 billion dollars in Canadian equivalent which is four to five times the average deal size in Canada.
2:45 – Successes
- An example of the successful execution of the Alberta government’s debt management program: travelling (e.g., Asia, NA, Europe, Panama) and introducing the province to the world and promoting Alberta bonds.
- Broadened Alberta’s investor base—only about 4% of investors in the deal were from North America and a typical deal in Canada is 30 investors, this was over 100
4:20 – Attractiveness of the yield relative to other instruments (e.g., German government bond, French government bond)
5:51 – Alberta fiscal situation could drive the spread lower or higher.
“Their [Alberta government] plan is to balance the budget in 2023 or 2024 next. What that means is the amount of debt is going to increase up until that point every single year. So as an investor in Alberta what I’d like to see is some more concrete plans around balancing that budget earlier in order to improve the overall credit quality.”
6:44 – Comparing Alberta and Ontario bonds
9:44 – NAFTA effect on Ontario versus Alberta
11:10 – The currencies Alberta should stick to in the future.
11:43 – What is a good price? Foreign currency risk
13:28 – Alberta government’s next steps in bond issuances – play the plan
14:00 – Rapid Fire Round:
- Best vegetarian restaurant?
- Favourite vegetable?
