Move follows trend among pension plans
Amidst historically high borrowing costs, British Columbia Investment Management Corporation (BCI) has issued its debut bond sale in Canadian dollars. The asset manager raised $1.25 billion by selling 10-year bonds at a spread of 90.5 basis points over similar tenor government securities, sources familiar with the matter told Bloomberg.
BCI’s move follows a trend among pension plans, incorporating bond programs into their strategies to provide better flexibility. These bonds are anticipated to secure the highest investment-grade rating from three credit rating agencies, including Moody’s Investors Service.
At present, Canada’s 10-year government bond yields stand at 4.01 percent, a mere 23 basis points away from their highest level since 2007, according to data compiled by Bloomberg. This stands in contrast to an average yield of 3.3 percent over the past year. The persistent challenge of inflation exceeding target levels may compel central banks to maintain elevated interest rates for a more extended duration than originally anticipated.
More recently, Canada Pension Plan Investment Board sold $1 billion in 10-year bonds on September 26, at a spread of 78 basis points over the benchmark, as reported by Bloomberg. As of Monday, the CPPIB notes, bearing a 4.75 percent yield, were quoted at a spread of approximately 78.5 basis points.
