Securities statistics, fourth quarter 2022
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Released: 2023-03-08
Borrowing in the form of debt securities by Canadian governments and corporations totalled $46.5 billion in the fourth quarter of 2022, the lowest level since the first quarter of 2021.
Overall, the total amount of debt securities owed by Canadian entities, in book value terms, reached $5,531.6 billion at the end of 2022. Meanwhile, the overall market value of these securities remained below the book value for a fourth consecutive quarter as rising interest rates continued to affect the prices of these instruments.
The fourth quarter of 2022 closed another year of strong borrowing activity by Canadian entities on debt markets. Chartered banks dominated the activity with record issuances, mainly in the first half of the year. Borrowing by the government sector slowed in 2022 following exceptionally large financing needs in 2020 and 2021 in the context of the COVID-19 pandemic.
Chart 1
Canadian debt securities issues by sector, net issuances
Lower borrowing activities by Canadian chartered banks
Canadian financial corporations were net borrowers of funds in the fourth quarter of 2022, raising $41.3 billion in the form of debt securities. Chartered banks were the main contributor with net issuances totalling $45.4 billion, mainly in the form of US dollar-denominated instruments targeting international markets. Borrowing by chartered banks slowed down in the fourth quarter, to the lowest level in 2022.
Meanwhile, Canadian non-financial corporations repaid a net $6.7 billion of debt securities over the quarter. On an industry basis, firms in the mining, quarrying, and oil and gas extraction industry as well as the manufacturing industry contributed the most to the activity.
The government sector borrowed a net $11.9 billion in the form of debt securities in the fourth quarter, up from $1.2 billion in the previous quarter. Net issuances were mainly in the form of money market instruments.
Net retirements of Canadian shares continue
Chart 2
Canadian equity securities issues by sector, net issuances
Net retirements of Canadian equity securities totalled $15.2 billion in the fourth quarter of 2022, a fourth consecutive quarter for which retirements exceeded new issuances. Financial corporations other than chartered banks were the main contributor led by their share buyback activities.
Year 2022 in review
Borrowing activities of chartered banks reach an all-time high
Chart 3
Debt securities issued by corporations, net issuances, annual
On an annual basis, Canadian entities issued a net $275.5 billion of debt securities in 2022, largely in the first half of the year. Chartered banks contributed the most with unprecedented net issuances of $226.3 billion, following net retirements of $29.9 billion in 2021. Chartered banks' borrowing in 2022 focussed on bonds placed on international markets, mainly denominated in US dollars and, to a lesser extent, in euros.
On the other hand, the federal government borrowed a net $26.6 billion in 2022, down considerably from $114.6 billion in 2021 and a record $368.9 billion in 2020. The federal government mainly borrowed in the form of bonds and repaid short-term debt securities in 2022.
In 2022, borrowing costs increased considerably as the Bank of Canada raised its policy rate by 400 basis points, from 0.25% at the beginning of the year. By the end of December 2022, Canadian short-term interest rates rose to their highest levels since July 2007 and Canadian long-term interest rates reached their highest levels since March 2011.
Chart 4
Debt securities issued by the federal government, net issuances, annual
Retirements of listed shares exceed new issuances in 2022
Retirements of Canadian listed shares exceeded new issuances by $62.8 billion in 2022. This net retirement activity was attributable to Canadian firms buying back their shares and to mergers and acquisitions. Non-bank financial corporations, manufacturing firms, as well as mining, quarrying, and oil and gas extraction firms contributed the most to net retirements in 2022. Canadian share prices, as measured by the Standard & Poor's/Toronto Stock Exchange composite index, fell by 8.7% in 2022. As a result, the outstanding amount of Canadian listed shares fell by $424.4 billion in 2022 to $3,714.6 billion, the largest decline since 2018.
Note to readers
This quarterly release, available about 70 days after the reference period, includes information on debt securities issues by sector, currency, maturity, type of interest rate and market of issuance, as well as by the economic sectors issuing debt securities in relation with the sectors investing in these instruments. It also includes information on Canadian equity securities by sector and industry. Statistics on Canadian portfolio investment abroad, previously released with Canada's international investment position, are now available with this release. Canadian holdings of foreign securities by type of securities, by currency of denomination, by country of issuer of these securities, and by sector of non-resident issuer are available.
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 negotiable financial 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 appreciates 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 depreciates.
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