The Province of British Columbia launched its debut entry in the Australian “Kangaroo” bond market, raising A$400 million, Minister of Finance Michael de Jong announced today.

The issue yielded 4.48% and raised about $407 million Canadian. This is the largest Australian-dollar bond issuance ever transacted by a Canadian province in the Kangaroo market.

The bond was fully hedged into a Canadian-dollar liability. B.C. will save 4.5 to 5 basis points over a comparable domestic market issue, resulting in more than C$1.9 million in savings over the life of the bond.

B.C.’s triple-A credit rating made the bond very attractive to investors. Initial marketing was for a A$200-million issue, but the offering was quickly oversubscribed. Nearly half of the issue was bought by investors from Japan and over one-third was divided equally among investors from Australia and Europe. Almost the entire issue was bought by insurance companies and private-sector fund managers.

This is the second time in less than 12 months the B.C. government has launched a successful bond into Asia-Pacific markets. In November 2013, the Province issued a one-year bond in the Chinese Renminbi (CNH) market, raising $428 million Canadian. B.C.’s was the first issue from a foreign government in this market and the largest from a foreign issuer.

B.C.’s annual borrowing program raises capital for infrastructure investment, funding schools, highways, health facilities and other priorities.

Credit-rating agencies have reaffirmed the provincial government’s credit ratings in the past few weeks, including triple-A ratings from Standard and Poor’s, Moody’s and Fitch, as well as AA (High) from Dominion Bond Rating Service. Global demand for the Province’s debt issues has increased in recent years, due in large part to B.C.’s stable economic and fiscal performance compared to other governments in Canada and abroad.

Quotes:

Minister of Finance Michael de Jong −

“Our entry into the Australian market shows our commitment to diversifying and internationalizing our investor base for B.C. bonds. B.C.’s AAA rating gives us unmatched access to foreign markets, which helps keep our cost of borrowing down. Investors know B.C.’s stable economy and prudent fiscal management makes our province a secure investment.”

Media Contacts:

Jamie Edwardson
Communications Director
Ministry of Finance
250 356-2821