Central banks and insurers are the target as outstanding debt nears $100 billion
Canada's national pension manager is courting central banks and insurers overseas to enlarge a bond program that already carries close to $100bn in outstanding debt.
CPP Investments has grown the program to more than 1,200 investors and $98bn in outstanding issuance, and it aims to sell roughly $20bn of bonds this year after issuing $14.5bn by March 31, Reuters reported.
The fund's head of total fund management, Manroop Jhooty, said the push abroad follows from how well the fund is already known at home.
"We have a little bit of a home field advantage in the sense that people in Canada know us, and so it is really focusing a little bit more on the international," Jhooty told Reuters, pointing to opportunities in the US, Europe, and Asia.
The borrowing is a portfolio tool rather than a response to any funding gap, according to CPP Investments.
The fund says it issues a modest amount of debt to hold its targeted level of risk while still owning lower-risk diversifiers such as real estate and infrastructure, since large allocations to those assets make its overall risk target harder to reach.
CPP issues the debt through CPPIB Capital Inc, a financing subsidiary whose bonds carry an unconditional, irrevocable guarantee from the parent and share its top credit ratings.
Morningstar DBRS and S&P Global both rate the fund and the subsidiary at their highest level, with DBRS citing CPP's net asset position, liquidity, low recourse-debt burden, and absence of direct pension or insurance liabilities.
S&P has set a recourse-leverage limit of 45 percent of net assets and, in its January 2025 review, put total liabilities at 22.4 percent of total assets, up from 19.3 percent a year earlier, flagging a downgrade only if that ratio moved sustainably toward 40 percent.
A wider international base makes the bonds easier to trade and demand steadier when deals price, Reuters reported.
Issuing across currencies, CPP raises money where buyers are keenest and swaps the proceeds back into its preferred exposure through derivatives.
Early in the fiscal year the fund leaned offshore, selling about $5bn in Australia against $3.4bn in the US and $2.9bn in Canada.
The pitch lands as foreign appetite for Canadian debt runs high.
Overseas investors bought a record $27.7bn of Government of Canada bonds in April, lifting their share of outstanding federal bonds to an all-time high of 43 percent, and among G7 markets only France and Germany draw a larger foreign stake, according to figures reported by the Globe and Mail.
Statistics Canada put total foreign purchases of Canadian government bonds at $38.5bn that month, with a further $10.6bn in provincial and $10.2bn in corporate paper.
Andrew Kelvin, head of Canadian and global rates strategy at TD Securities, told the Globe that a broader buyer base has helped Ottawa fund large bond programs without pushing up borrowing costs unduly.
Jhooty and John Sim, a managing director in the total fund management group, said government efforts to promote Canada as an investment destination had lifted the country's profile and drawn more questions about its investment landscape.
The trend carries a counterweight.
In its 2026 Financial Stability Report, the Bank of Canada warned that a wider foreign base can also import volatility, and it flagged hedge funds as a fragility: a loss of repo funding or a sharp move in bond prices could force fire sales that destabilize a core market and raise borrowing costs across the economy.
For plan members and employers, the financing strategy sits against a fund that leans increasingly on investment returns.
The Office of the Chief Actuary's 32nd report found the CPP sustainable and projected investment income to climb from 37 percent of base CPP revenues in 2025 to 48 percent by 2050 and 63 percent by 2100, with base CPP assets rising from $651bn at the end of 2024 to about $2.9tn by 2050.
A revised actuarial analysis has since found a contribution-rate cut sustainable, though annual contributions are now projected to fall short of expenditures from 2027, four years earlier than the previous report indicated.
Under the lower rate, base CPP assets would reach about $2.7tn by 2050, an 8 percent reduction against the earlier 9.9 percent-rate path, and the change would save an employee earning $70,000 roughly $133 a year, with the same saving for the employer.
CPP Investments closed fiscal 2026 on March 31 with net assets of $793.3bn, up from $714.4bn a year earlier, and reported a 7.8 percent net return for the year and 8.8 percent annualized over 10 years.
The fund, which runs at arm's length from governments and serves more than 22 million contributors and beneficiaries, projects its total assets will grow to about $4.3tn by 2050.
