International investors continued to build their Canadian securities holdings in May, extending a buying streak seen throughout 2026, according to National Bank of Canada in a Friday note.
While international investors reduced exposure to Canadian equities, strong demand for debt securities, particularly bonds, more than offset the outflows, wrote National Bank's Taylor Schleich & Warren Lovely in the note.
The trend marks a sharp reversal from the first half of 2025, when U.S. trade tensions and tariff risks weighed on sentiment, dampening Canadian bond demand and driving broader outflows from money market and equity assets.
In 2026, international demand for Canadian bonds has emerged as a key theme, with year-to-date net purchases reaching a record C$145 billion, the strongest start to a year on record, said the bank.
Although high Canadian government borrowing has boosted supply, demand has remained strong, including for Canadian-dollar debt. International investors have played a key role in the Government of Canada (GoC) bond market, with non-resident holdings reaching a record share in May, added National Bank after last week's Statistics Canada data.
"Nowhere are foreign investors more important than for GoC bonds and their impact on funding Ottawa's ambitious investment agenda is notable," wrote Schleich and Lovely in the note.