Ontario plans to sell more foreign currency bonds as deficit, spending grow

Ontario plans to borrow $59.8 billion (US$42.7 billion) to fund a larger budget deficit and spending on highways and other infrastructure, and expects more of it will come from foreign currency bond sales.

 

Long-term borrowing needs for Canada’s most populous province are seen at $42.8 billion for the fiscal year ending March 31, 2026. As much as 30 per cent may come from foreign markets, according budget documents released Thursday by Finance Minister Peter Bethlenfalvy.

 

That would mean up to $12.8 billion of debt supply from Ontario for investors in non-Canadian currencies, which would be a 22 per cent increase from the past fiscal year.

hort-term borrowing is set to rise by $5 billion in response to higher investor demand for shorter-dated bonds, according to the budget.

 

So far, elevated borrowing hasn’t meant higher premiums. The aggregate risk premium for investors holding Canadian provincial bonds tightened to 63 basis points after a brief widening in early April, when U.S. President Donald Trump unleashed tariffs on dozens of countries — some of which he later walked back.

 

Ontario plans to spend more in areas like health care and education, helping to drive its expected budget shortfall to $14.6 billion. That’s the largest since fiscal 2011-12 except for one year during the COVID pandemic, government data show.

 

Chunzi Xu, Bloomberg News

 

 

 

 

This article was first reported by BNN Bloomberg