International demand for Canadian bonds surged to a record pace in June, with non-residents purchasing C$185 billion worth of Canadian bonds year to date (YTD), which is more than 50% above the previous record pace, according to National Bank of Canada Capital Markets in a note.
Demand has been concentrated largely in Government of Canada (GoC) bonds, with investors worldwide -- particularly those in the US -- driving the strong inflow, said the bank in a note Monday.
"At 2026's blistering YTD pace of GoC accumulation, foreign investors have absorbed all of Ottawa's net issuance and the bonds rolling off the BoC's balance sheet," wrote National Bank's Chief Rates and Public Sector Strategist Warren Lovely and Rates Strategist Taylor Schleich in the note.
As a result, non-residents now account for 45% of the domestic GoC bond market, compared with 42.9% held by Canadian investors.