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Canada to issue up to $3B in U.S. dollar bonds

Last Updated: Friday, August 28, 2009 | 4:24 PM ET

CBC News

The federal government plans to issue up to $3 billion in U.S. dollar-denominated bonds, its first foreign-currency global bond issue in more than a decade, the finance ministry announced Friday.

The bond issue will be made in the near future, subject to market conditions, the ministry said in a release on its website.

It said the issue will provide funds to supplement Canada's foreign exchange reserves and to meet foreign currency requirements to support current and anticipated lending by the International Monetary Fund.

Canada holds its foreign exchange reserves in the Exchange Fund Account (EFA), which provides foreign currency liquidity and supports the promotion of orderly conditions for the Canadian dollar in foreign exchange markets, the ministry said.

Funds for the EFA can be raised through cross-currency swaps of Canadian-dollar borrowings, foreign-currency-denominated debt issues, and outright purchases of foreign currency.

"In recent years, the government has relied primarily on cross-currency swaps to finance the EFA," the ministry said. "The global bond issue will prudently diversify the government’s sources of foreign currency financing."

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