Canada to issue first U.S. dollar bond in more than a decade

[LargoWinch]

I am unclear about this. Is this to support the USD and keep the Loonie down?

Or perhaps someone at the Canadian Federal Government thinks they can borrow $3B and repay with devalued dollar?

The former appears to me as the main reason for the move. If so, my theory on the $CAD bonar appear more and more correct by the day.

Paul Vieira, Financial Post
Published: Friday, August 28, 2009

OTTAWA -- The Department of Finance said Friday Canada plans to issue up to US$3-billion in U.S.-dollar-denominated bonds – the first foreign-currency global debt issue in more than a decade.

Finance said the U.S.-dollar bond issue would provide funds to augment the country's foreign exchange reserves and meet requirements to support lending by the International Monetary Fund. A department spokesman said the bond offering could be as large as US$3-billion. There are no details about timing, other than it could be done "shortly."

...

Full Article Here.

[blazespinnaker]

Re: Canada to issue first U.S. dollar bond in more than a decade

Or perhaps someone at the Canadian Federal Government thinks they can borrow $3B and repay with devalued dollar?

Yup, that's exactly it. The Canadian government is getting into long term Forex speculation! Actually they're probably just trying to reduce their exposure to the USD.

Anyways, I can't for life of me figure out how this weakens the CAD.

"If anything, analysts say, the move would be positive for the loonie should the U.S. dollars raised be converted back into Canadian dollars"

[WildspitzE]

Re: Canada to issue first U.S. dollar bond in more than a decade

Dollar carry trade back en vogue.

[metalman]

Re: Canada to issue first U.S. dollar bond in more than a decade

another nail in the coffin for the strong us$ camp.

[idianov]

Re: Canada to issue first U.S. dollar bond in more than a decade

Or perhaps someone at the Canadian Federal Government thinks they can borrow $3B and repay with devalued dollar?

There is a rising inventory of US Treasuries in FED custodials account. Maybe Canadian Finance Minister says it is time to short US Treasuries? :rolleyes:

Custody_Account_components_and_total_0.jpg

[metalman]

Re: Canada to issue first U.S. dollar bond in more than a decade

There is a rising inventory of US Treasuries in FED custodials account. Maybe Canadian Finance Minister says it is time to short US Treasuries? :rolleyes:

[ATTACH]2059[/ATTACH]

glad chris reads itulip...

Private investors nearly stopped buying US treasury debt in 2003

Private investors stopped buying US Agency debt in 2006

[goadam1]

Re: Canada to issue first U.S. dollar bond in more than a decade

I guess I could do the same. Maybe now is the time to take out a big, fat mortgage. Wouldn't I be shorting the dollar domestically?

[stanley2008]

Re: Canada to issue first U.S. dollar bond in more than a decade

I guess I could do the same. Maybe now is the time to take out a big, fat mortgage. Wouldn't I be shorting the dollar domestically?

I was thinking the same thing, here are Verrochio's thoughts.

http://www.itulip.com/forums/showpos...8&postcount=18

[CanuckinTX]

Re: Canada to issue first U.S. dollar bond in more than a decade

The trick is what do you do with all those dollars you took out with your big fat mortgage? I guess you're assuming you've got a pretty sure thing inflation hedge you'd invest them in. Just don't buy a Harley or blow it on a cruise around the world! :-)

[ThePythonicCow]

Re: Canada to issue first U.S. dollar bond in more than a decade

I guess I could do the same. Maybe now is the time to take out a big, fat mortgage. Wouldn't I be shorting the dollar domestically?

I would take out such a mortgage only under two conditions.

1. I hedged the entire mortgage, holding a safe, liquid source of funds to pay it all off if need be. Perhaps this means depositing the entire mortgage proceeds in U.S. treasuries or FDIC insured accounts.
2. I had a source of income that would likely increase in nominal value in times of inflation, making it worth my while to speculate that I could pay the mortgage off with cheaper dollars.

[cjppjc]

Re: Canada to issue first U.S. dollar bond in more than a decade

I would take out such a mortgage only under two conditions.

1. I hedged the entire mortgage, holding a safe, liquid source of funds to pay it all off if need be. Perhaps this means depositing the entire mortgage proceeds in U.S. treasuries or FDIC insured accounts.
2. I had a source of income that would likely increase in nominal value in times of inflation, making it worth my while to speculate that I could pay the mortgage off with cheaper dollars.

Sounds like a good idea except:

1. Can't be done in today's interest rate climate, can it?

2. The part of the money used for speculation could be lost. Which makes #1 even harder.

[ThePythonicCow]

Re: Canada to issue first U.S. dollar bond in more than a decade

Sounds like a good idea except:

1. Can't be done in today's interest rate climate, can it?

2. The part of the money used for speculation could be lost. Which makes #1 even harder.

It can almost never be done in any constant interest rate climate, because (unless you're a bank or something) you can't borrow for less than you can lend.

This is a bet on inflation causing both your nominal income to rise, and the safe rate of return on the savings rising above the rate of the mortgage obtained earlier.

I do not know any safe, sure way to make money for honest people of limited means other than hard work, and even that is getting more difficult these days.

[goadam1]

Re: Canada to issue first U.S. dollar bond in more than a decade

It can almost never be done in any constant interest rate climate, because (unless you're a bank or something) you can't borrow for less than you can lend.

This is a bet on inflation causing both your nominal income to rise, and the safe rate of return on the savings rising above the rate of the mortgage obtained earlier.

I do not know any safe, sure way to make money for honest people of limited means other than hard work, and even that is getting more difficult these days.

Safe and honest money. lol, ha, good one.

I don't need to take out a mortgage. I'm debt free. I own three properties. One is undeveloped land in western Mass. and non are income generating. I hate debt.

But the irony is a Nation State is taking on debt in a depreciating currency. Why wouldn't it work for and individual. I have too much in cash. Wouldn't taking on debt going into an inflationary period act as a hedge on cash making negative interest? I wonder if this is the time to leverage into income generating property. You would need the skill set to make it a business for yourself. But I don't think it is a stupid idea.

[LargoWinch]

Re: Canada to issue first U.S. dollar bond in more than a decade

I do not know any safe, sure way to make money for honest people of limited means other than hard work, and even that is getting more difficult these days.

So true. Look at most of us on iTulip; we understand that we are simply in "Purchasing power preservation" mode and that is all I want [when POOM hits that may be different however; lets call this "hope" you can believe in ;)].

It is sad that Central Banks and their cronies are so greedy that in addition to sucking all the productivity gains (which should lead to lower prices and a higher standard of living for all) via inflation they create yet even more inflation, which is forcing honest savers to "speculate" just to keep up.

Like Carlin said it so well: they own the place and we are not part of the club (at least not as far as I am concerned).

[jk]

Re: Canada to issue first U.S. dollar bond in more than a decade

i've mentioned this elsewhere but it seems relevant here:
just did a cash-out refi. majority of funds just refi'd my 1st mortgage and the balance i had on my [floating rate] equity line, locking in the interest rate. a good chunk of the cash out is paying for a geothermal heating/cooling system which will get me off oil - an inflation hedge as in place of oil i'll be [efficiently] using electricity, the price of which i expect will track nuclear energy and natural gas. so that's an option as long as you expect to remain in your current home for a substantial period. [if oil rises as we all expect, it ultimately will contribute substantially to the resale value of your home, as well.]