CIBC sees Government of Canada bond issuance rising 22% (more debt)

[CdnFox]

 

https://www.bnnbloomberg.ca/freeland-on-track-to-miss-deficit-target-desjardins-warns-1.2046831

Justin Trudeau’s government will end up tapping the bond market for around $250 billion in debt next year, one of the country’s biggest lenders says.

Canadian Imperial Bank of Commerce says a combination of refinancing needs, the budget balance and non-budget items totals $265 billion, but the Finance Department has already pre-funded about $13 billion. This reduces CIBC’s bond issuance estimate for the 2024-25 fiscal year to about a quarter-trillion dollars.

Finance Minister Chrystia Freeland is set to introduce her government’s budget on April 16.

By CIBC’s estimates, the 22 per cent increase in gross bond debt from the current year represents the single largest issuance excluding 2020-21 and 2021-22, when Canada’s government spent billions and racked up record deficits during the pandemic, analysts Ian Pollick, Sarah Ying and Arjun Ananth wrote in a report to investors.

“Bond issuance is rising at a historic pace. When the sovereign is abundant with debt, investors need to rethink their allocation strategies,” Pollick said in an email.

[CdnFox]

Short version - we're borrowing massive amounts of money at high interest rates. Which means more debt payments in the future. 

We'll see what freeland says in her budget but it's also worth noting this:

Freeland on track to miss deficit target, Desjardins warns

https://www.bnnbloomberg.ca/freeland-on-track-to-miss-deficit-target-desjardins-warns-1.2046831

 

Honestly - While i'm confident that PP can right the ship and move us back in the right direction it's going to take a generation of good decisions to wipe out the damage being done today.

[Legato]

2 minutes ago, CdnFox said:

 

https://www.bnnbloomberg.ca/freeland-on-track-to-miss-deficit-target-desjardins-warns-1.2046831

Justin Trudeau’s government will end up tapping the bond market for around $250 billion in debt next year, one of the country’s biggest lenders says.

Canadian Imperial Bank of Commerce says a combination of refinancing needs, the budget balance and non-budget items totals $265 billion, but the Finance Department has already pre-funded about $13 billion. This reduces CIBC’s bond issuance estimate for the 2024-25 fiscal year to about a quarter-trillion dollars.

Finance Minister Chrystia Freeland is set to introduce her government’s budget on April 16.

By CIBC’s estimates, the 22 per cent increase in gross bond debt from the current year represents the single largest issuance excluding 2020-21 and 2021-22, when Canada’s government spent billions and racked up record deficits during the pandemic, analysts Ian Pollick, Sarah Ying and Arjun Ananth wrote in a report to investors.

“Bond issuance is rising at a historic pace. When the sovereign is abundant with debt, investors need to rethink their allocation strategies,” Pollick said in an email.

I'm far from being an economist. From a layman's POV all I see is excessive spending with little to no result.

The mealy mouths from the government then brag about how well we're doing.

 

[CdnFox]

2 minutes ago, Legato said:

I'm far from being an economist. From a layman's POV all I see is excessive spending with little to no result.

The mealy mouths from the government then brag about how well we're doing.

 

Well bonds are how the gov't raises money that they want to borrow.

So we've got a lot of new spending PLUS there are OLD bonds that are coming due that will need to be refinanced.

But - they'll be refinanced at the interest rates today.  not the lower rate they used to be.  So we're borrowing a lot of new money and reborrowing a lot of older money at higher rates - which means our payments on the debt are going to be huge.

 

But the scariest line is this:

“Bond issuance is rising at a historic pace. When the sovereign is abundant with debt, investors need to rethink their allocation strategies,” Pollick said in an email.

 

Translation - businesses won't be investing in canada anytime soon.