International investors have significantly increased their holdings of Canadian-dollar bonds this year, while continuing to buy Canadian bonds denominated in other currencies, National Bank of Canada said in a Friday note.
The trend is especially clear in the Government of Canada (GoC) bond market, where international investors have bought more than CA$100 billion so far this year, almost twice the increase in the federal government's bond issuance, the bank said.
As a result, international investors now hold more than 46% of the GoC bond market, a record high, National Bank said.
While relying more on international investors carries some risks, the strong demand suggests continued confidence in Canada, the bank added.
Strong international demand for government bonds also supports Canada's strong public investment plans by creating a solid source of demand for new bond sales, said National Bank.