June 18, 2012 / 12:48 PM / in 5 years

Foreigners again pile into Canadian securities

OTTAWA (Reuters) - Foreigners invested a net C$10.16 billion ($9.96 billion) in Canadian securities in April, after net sales of C$2.40 billion in March, but the pace so far this year is the slowest since 2007, Statistics Canada reported on Monday.

Canada has taken on somewhat of a safe-haven status because of its relatively small fiscal deficits and debt and its solid banks. That said, the speed of foreign investment in Canada so far this year is about half of what it was in first four months of last year.

From January to April, foreign investment in Canadian securities totaled C$16.21 billion, the lowest since C$9.23 billion was acquired in the same period in 2007. It compared with C$30.02 billion in the same span of 2011. Foreigners bought a record C$117.43 billion in Canadian securities in all of 2010.

Most of the foreigners’ acquisitions were in bonds, at C$8.99 billion, led by secondary market purchases of federal bonds. The pace of purchases of Canadian bonds so far this year has outstripped the pace of the first four months of 2011, while foreigners have actually been selling stocks.

Foreigners, mainly U.S. residents, sold C$941 million of Canadian equities, for a total divestment so far this year of C$1.60 billion.

Canadians sold C$2.68 billion of foreign securities in April, after buying C$7.71 billion worth in March. They sold C$2.88 billion of foreign bonds, concentrated in U.S. government medium-term bonds.

“The reduction in holdings of U.S. government bonds was the largest since June 2011,” Statistics Canada said, pointing out that U.S. long-term yields fell 20 basis points in April, leading to an interest rate differential in favor of investing in Canada.

Reporting by Randall Palmer; Editing by Theodore d'Afflisio

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