Canada’s most easterly province plans to return to the U.S. dollar bond market for the first time in years, seeking to ease pressure on its domestic bond yields as an oil-price crash leads to budget deficits.

“We are providing some of the highest yields in the country,” among provincial borrowers, Newfoundland and Labrador Deputy Minister of Finance Donna Brewer said at a panel during the Bloomberg Canadian Fixed Income Conference in New York on Tuesday. “Hopefully, we can get demand in the U.S., it will help with demand in our market.”

Newfoundland has been covering its needs by borrowing exclusively in the local currency. The oil-rich province is paying the price for deeper deficits amid a decline in crude prices. In July, its credit rating was cut to Aa3 from Aa2 by Moody’s Investors Service, which kept its outlook negative as it forecast that the province’s net direct and indirect debt will approach 240 percent of revenue by 2020-21.

Newfoundland’s gross domestic product is forecast to contract for a third straight year in 2016 with a 0.7 percent decline, according to a Bloomberg survey. The forecast also shows a 0.1 percent contraction for next year.

Other provinces are also considering foreign currency sales. Mike Manning, executive director of the capital markets division at the Ontario Financing Authority, said the province is looking at opportunities for debt sold in Australian and U.S. currency. He added the euro market looks expensive.

The province has covered more than half of this year’s borrowing requirements of C$24.4 billion ($18.5 billion). It projects a deficit of C$4.3 billion for the fiscal year ending March 31 and is committed to balancing its budget by 2017/18.

It expects to issue around three-quarters of its bonds in Canadian dollars and the rest in the U.S. dollar and the euro. Manning said China’s "panda" market looks expensive and there are regulatory hurdles now, but in the long term the market looks attractive.

Ontario’s gross-domestic product represents about 40 percent of Canada’s total. It has a smaller energy sector compared with the rest of the country, with most of its economy driven by financial and business services as well as manufacturing.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE