Canada as an Investment Safe Haven: Implications for Municipal Credit

In recent years, we have seen a sharp increase in foreign demand for Canadian assets, including bonds issued by Canadian municipalities and provinces. Foreign capital provides Canadian governments with significant opportunities, including a more diversified investor base and cheap financing for infrastructure projects.

But, it also poses risks. IMFG Post-Doctoral Fellow Kyle Hanniman discussed the factors driving foreign investment in Canada's subnational bond market; the implications of these developments for municipal borrowing costs and credit spreads; and what, if anything, municipalities are doing to manage the risks and opportunities involved.