April buying breaks records as Ottawa readies $280 billion in nation-building spending
Foreign investors bought Government of Canada bonds at a record pace in April, pushing non-residents' share of outstanding federal debt to an all-time high of 43 percent.
The surge widens the pool of buyers financing Prime Minister Mark Carney's spending plans, according to Reuters, but it also raises the prospect of sharper swings in the country's debt market.
Non-resident investors purchased $27.7bn in Government of Canada bonds during the month, a record monthly total.
Among Group of Seven sovereign debt markets, only France and Germany, backed by the euro's reserve-currency status, now draw a higher foreign stake.
Statistics Canada data show the buying ran well beyond federal paper.
Foreign investors added $46.9bn in Canadian securities across April and $104.0bn since January.
Overseas buyers picked up $38.5bn in government bonds overall, a total the agency called unprecedented, with provincial bonds drawing $10.6bn and corporate bonds a further $10.2bn.
American buyers led the demand, though StatCan noted appetite from Asia and Europe also strengthened.
The appetite matters because Ottawa plans to lean heavily on the bond market.
Carney has committed to invest more than $280bn over the next five years on infrastructure, defence, housing and productivity measures, much of it financed through borrowing, as per Reuters.
A broader buyer base could help keep those costs contained.
Andrew Kelvin, head of Canadian and global rates strategy at TD Securities, welcomed the broader buyer base as "a positive development."
It has let the government run relatively large bond programs without unduly raising borrowing costs, he told Reuters.
Part of the flow reflects a move out of US assets.
Foreign investors are diversifying away from US Treasuries, according to a report last month from the Institute of International Finance cited by Reuters, which suggested US government debt increasingly looks to be on an unsustainable path.
Robin Marshall, director of global investment research at FTSE Russell, pointed to the same trend.
"Diversification away from Treasuries is one likely driver of increased foreign bond holdings in Canada, not least because of the high sovereign bond rating of Canada and liquid markets," he told Reuters.
Canadian investors, for their part, turned into net sellers abroad.
They trimmed foreign holdings by $11.4bn in April, their first net sale outside the country since October 2025.
That included $20.8bn shed from US government bonds between January and April, reversing the $19.6bn they had added over the same months in 2025.
Combined foreign buying and domestic selling produced a net capital inflow of $58.3bn, the largest since October last year.
The rush comes as governments carry heavy debt loads.
The federal government will spend a projected $54.0bn on debt-interest payments in 2025/26, nearly matching the $54.7bn it sends provinces through health transfers, the Fraser Institute said in a recent study.
Combined federal and provincial net debt is set to reach $2.44tn by the end of the fiscal year, the institute reported, and Ottawa projects deficits above $53bn a year through 2030/31.
Canada still borrows more cheaply than its peers.
Canada's net debt sits at 10 percent of the economy, the lowest in the G7 by a wide margin, per Reuters.
The measure counts financial assets such as the Canada Pension Plan and Quebec Pension Plan.
Over a 10-year term, Canada borrows at roughly 3.40 percent, about one percentage point below what investors demand on US debt.
Not everyone views the foreign influx as risk-free.
A sudden exit by overseas buyers could inject volatility, a dynamic France experienced during political uncertainty in 2017, Reuters noted.
The Bank of Canada has warned that a rapid unwinding of hedge fund leverage could threaten financial stability.
The funds now buy close to 50 percent of some Government of Canada bond maturities at auction and account for about 30 percent of secondary-market trading between dealers and clients.
The central bank's move to add Goldman Sachs as a government securities distributor could pull in still more foreign participation, including from hedge funds.
Even so, several strategists read the demand as a broad endorsement.
Karl Schamotta, chief market strategist at Corpay, said the strong foreign appetite for Canadian government debt signals "a vote of confidence" in the country's political institutions.
It also points to faith in Canada's overall economic trajectory, he said.
