ESG, Project Bonds Set to Surge in Canada After Record Year
- Incentives for companies selling debt will shift after Covid
- All-in yields are running close to the lowest levels on record
Sales of sustainable and project bonds in Canada are expected to take off next year after companies issued a record amount of corporate debt in 2020 to bolster cash reserves and push out maturities.
Issuance of so-called environmental, social and governance securities is poised to grow as some borrowers lock in cheaper financing than through conventional debt sales and the federal government prepares its first green bond. Additionally, national and local governments plan to move ahead with infrastructure projects -- on which contractors may issue bonds -- as part of a wider effort to revive the economy, while banks are expected to continue building up their capital buffers by selling securities known as limited recourse capital notes (LRCNs).