Canada Strikes Largest US-Currency Transaction On Record; $13.3Bn

Canada has received a significant amount of investor orders for its largest ever US dollar-denominated transaction, amounting to over $13.3 billion, according to an anonymous source. The country priced $4 billion of five-year notes at a spread of 11 basis points over US Treasuries, which is lower than the preliminary price discussions held on April 16th. However, the order book does not take into account the potential demand from the deal’s managers.

The inversion in the Treasury yield curve has been declining for the past five weeks as economic data suggests another interest rate hike from the Federal Reserve. This development has caused the extra yield of two-year over the five-year to widen to around 52 basis points, which is the largest inversion in more than a month.

Highly rated issuers, such as Canada, are taking advantage of the relative stability in the Treasury market to raise funds after a quiet March, according to Gennadiy Goldberg, a senior US rates strategist at TD Securities. Canada’s Ottawa-based government has committed to maintaining liquid foreign reserves at or above 3% of its nominal gross domestic product, according to a statement on the Department of Finance website.

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Canada Strikes Largest US-Currency Transaction On Record; $13.3Bn

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