Securities statistics, first quarter 2020
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Released: 2020-06-09
Net issuance of debt securities by Canadian corporations and governments surged to $97.0 billion in the first quarter. This financing activity was led by strong net issuances by Canadian chartered banks and, to a lesser extent, the federal government. The Government of Canada's economic response plan to support enterprises and households impacted by the COVID-19 pandemic resulted in an increased need for borrowing in March.
Overall, the total amount of debt securities owed by Canadian entities to domestic and foreign creditors was up $190.0 billion to reach $4,568.1 billion at the end of the quarter. In addition to the net issuance activity, the revaluation from currency fluctuations contributed to the growth, as the Canadian dollar fell to its lowest level compared with the US dollar since the first quarter of 2003. The value of securities denominated in foreign currencies accounted for 26.3% of all outstanding debt securities at the end of the first quarter, compared with 16.6% at the beginning of 2012.
Chart 1
Debt securities issues by sector, net issuances
New issuance surge driven by chartered banks and the federal government
Canadian chartered banks issued a net $66.2 billion of debt securities in the first quarter, mostly in the form of covered bonds in Canadian dollars. Covered bonds are debt instruments that are issued by financial institutions and secured by a segregated pool of assets such as mortgage assets. In the first quarter, net issuance of covered bonds amounted to $57.1 billion, in response to Bank of Canada actions and measures to support the Canadian financial system and overall market liquidity conditions during the COVID-19 pandemic. The total outstanding amount of covered bonds reached $239.9 billion by the end of the quarter.
The federal government issued a net $27.7 billion of debt securities in the first quarter, with the bulk in March and in the form of money market instruments. Net issuances of short-term paper last reached this level in the fourth quarter of 2008, at the height of the financial crisis. This trend continued in April with even larger net issuances of treasury bills by the federal government. By the end of the first quarter, the outstanding amount of federal government short-term debt had increased 21.2% from the fourth quarter to reach $153.5 billion. Meanwhile, the Bank of Canada lowered its benchmark overnight interest rate three times in March, from 1.75% to 0.25%, and Canadian short-term interest rates plunged 117 basis points in the quarter.
In contrast, non-financial corporations recorded $0.7 billion in net retirements of debt securities, as bonds redeemed exceeded new borrowing in the quarter. On an industry basis, manufacturing, transportation and warehousing, as well as mining, quarrying, and oil and gas extraction, contributed the most to the net retirements. Meanwhile, corporations in the utilities sector and the information and cultural industries sector increased their borrowing activities in the quarter. At $5.8 billion, net issuances for the utilities sector were at their highest level since the fourth quarter of 2013.
Chart 2
Debt securities issues by currency, stocks at book value
Net retirements of equity securities in the quarter
Net retirements of equity securities issued by Canadian corporations totalled $11.2 billion in the first quarter, as retirements surpassed new issuances. This was the third quarter of net retirements in the last four. New issuance activity has slowed considerably in recent years after reaching a high of $76.0 billion in 2017.
On a sector basis, net retirements by financial corporations totalled $12.5 billion, while non-financial corporations recorded net new issues for the first time in the last four quarters.
Chart 3
Equity securities issues by sector, net issuances
The total market value of listed Canadian equities stood at $2,414.5 billion at the end of the first quarter, the lowest level since the second quarter of 2016. Nearly all industries, including both financial and non-financial corporations, saw their value decline substantially following the shock of the COVID-19 pandemic and a collapse in oil prices.
Chart 4
Equity securities issues by sector, stocks at market value
Note to readers
In September 2015, the G20 Finance Ministers and Central Bank Governors launched the second phase of the G20 Data Gaps Initiative (DGI-2). The goal of the initiative is to ensure the financial sector, governments, businesses and citizens have the necessary information to monitor and react to the build-up of financial risk in the domestic and global economies.
The DGI-2 consists of 20 recommendations encouraging countries to compile and disseminate new or increasingly detailed statistical products. The goal of the initiative is to have each member of the G20 disseminate these recommended datasets on a regular and timely basis by 2021.
This quarterly release, available about 70 days after the reference period, addresses recommendation 7 of the DGI-2 on securities statistics. It includes information on debt securities issues by sector, currency, maturity, type of interest rate and market of issuance. It also includes information on equity securities by sector and industry. Definitions and concepts used are consistent with the recommendations of the Handbook on Securities Statistics, an internationally agreed framework for classifying securities instruments.
Data are accessible through an easy-to-use and flexible visualization tool. The tool includes dynamic cross-tables that allow users to look at the dataset from a variety of dimensions, as well as other visualization layers that illustrate different characteristics of the data in the form of interactive tables and charts.
Definitions
Securities statistics cover issuances and holdings of financial negotiable instruments. Securities include debt instruments designed to be traded in financial markets, such as treasury bills, commercial paper and bonds, as well as equity instruments, such as listed shares.
The book value of a debt instrument reflects the value of the debt at creation, and any subsequent economic flows, such as transactions (e.g., repayment of principal), valuation changes (independent of changes in its market price), and other changes. The book value is composed of the outstanding principal amount plus any accrued interest. The market value reflects the value at which securities are acquired or disposed of in transactions between willing parties, excluding commissions, fees and taxes.
Currency valuation
The value of securities denominated in foreign currency is converted to Canadian dollars at the end of each period. When the Canadian dollar is appreciating in value, the restatement of the value of these instruments in Canadian dollars lowers the recorded value. The opposite is true when the Canadian dollar is depreciating.
Products
The data visualization product "Securities statistics," part of the Statistics Canada – Data Visualization Products (71-607-X) series, is available online.
The document "Enhancing Canada's statistics on securities," part of the Latest Developments in the Canadian Economic Accounts (13-605-X) series, is also available.
The Economic accounts statistics portal, accessible from the Subjects module of our website, features an up-to-date portrait of national and provincial economies and their structure.
Contact information
For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca).
To enquire about the concepts, methods or data quality of this release, contact Yiling Zhang (613-286-1684; yiling.zhang@canada.ca), International Accounts and Trade Division.
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