Foreigners bet on Canadian bonds in November

Mon Jan 18, 2010 8:50am EST
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OTTAWA (Reuters) - Foreigners invested heavily in Canadian bonds in November as credit markets recovered and the Canadian dollar rose, pushing total purchases of Canadian securities to C$10.54 billion ($10.23 billion) in the month, Statistics Canada said on Monday.

Their net purchase of C$97.82 billion in the first 11 months of 2009 is higher than any previous annual foreign investment on record.

In November, foreigners bought C$12.90 billion worth of bonds, more than double the previous month's acquisitions, including C$7.2 billion in corporate bonds. Most of the interest in the corporate sector was in new issues. Nonresidents also acquired C$1.6 billion in federal government bonds and C$3.1 billion in provincial government bonds.

The federal government issued more debt last year than in previous years as it slid into a deficit and analysts have said foreigners were likely betting on higher yields and a continued appreciation of the Canadian dollar against the U.S. dollar.

Foreigners divested C$1.9 billion worth of short-term money market, continuing a trend that began in July, and shed C$464 million in stocks after nine months of acquisitions, Statscan said.

Canadians bought C$2.44 billion in foreign securities in November, the biggest amount since June 2007 as they returned to the U.S. government debt market.

($1=$1.03 Canadian)

(Editing by James Dalgleish)