Securities statistics, second quarter 2020
Net issuances of debt securities by Canadian governments and corporations totalled $521.0 billion in the second quarter, following net issuances of $95.2 billion in the first quarter. In comparison, total issuances exceeded total retirements by an average of $38.9 billion per quarter in the previous five years. Financing activity in the second quarter was led by unprecedented levels of issuances by the federal government, levels five times higher than the previous record high observed at the height of the global financial crisis.
The total outstanding value of Canadian debt securities reached a record high of $5,034.6 billion at the end of the second quarter, up $471.6 billion from the previous quarter. The increase, led by the issuance activity, was moderated by the downward revaluation resulting from the appreciation of the Canadian dollar against major foreign currencies. About one-quarter of all Canadian debt securities outstanding is denominated in foreign currencies, predominantly in US dollars.
Federal government borrowing activities at unprecedented levels
The federal government issued an unprecedented $302.3 billion of debt securities in the second quarter, $233.9 billion of which was in the form of money market instruments. The surge in the federal government borrowing activities mainly occurred in April to support Canadian enterprises and households impacted by the COVID-19 pandemic. In comparison, net issuances of debt securities by the federal government totalled $55.8 billion in the fourth quarter of 2008, at the height of the global financial crisis.
In the first half of the year, the outstanding amount of federal government debt securities increased by 44.6%, with short-term debt more than tripling to reach $387.7 billion. Since January, Canadian long-term interest rates fell 107 basis points and short-term interest rates declined to their lowest level in more than a decade.
Canadian corporations were also net borrowers of funds in the form of debt securities in the second quarter. Net issuances of long-term debt securities by the financial sector totalled $128.6 billion, largely composed of banks' Canadian dollar-denominated bonds with an original term of two to five years. Canadian banks responded to Bank of Canada measures to support the financial system and overall market liquidity conditions during the COVID-19 pandemic. Meanwhile, total net issuances by non-financial corporations amounted to $26.9 billion, following two quarters of net retirements. On an industry basis, transportation and warehousing, manufacturing as well as utilities contributed the most to the net issuances.
The market value of outstanding Canadian equity securities recovers
Net retirements of equity securities issued by Canadian corporations totalled $6.7 billion in the second quarter, marking a third consecutive quarter where retirements exceeded new issuances. Non-financial corporations, led by professional, scientific and technical service firms, contributed the most to net retirements over the quarter. In contrast, financial corporations, excluding chartered banks, accounted for the bulk of the net retirement activity in the previous two quarters.
The market value of outstanding Canadian-listed equity securities increased by $388.6 billion to reach $2,812.6 billion at the end of the second quarter. The Canadian equity market recovered strongly from the market turbulences observed in the months of March and April related to the COVID-19 pandemic. The S&P/TSX index rose by 16.0% in the second quarter, following a 21.6% plunge in the first quarter.
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.
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.
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.
The data visualization product "Securities statistics," part of the series Statistics Canada – Data Visualization Products (71-607-X), is available online.
The document "Enhancing Canada's statistics on securities," part of Latest Developments in the Canadian Economic Accounts (13-605-X), 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.
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 Vivian Niu (647-961-8794; Chenvivian.email@example.com), International Accounts and Trade Division.