Investors are clamouring for high-quality bond issues, and while some strategists question the wisdom of buying corporate bonds, given the bad economic news, treasurers are taking advantage of the wide open window.
Hydro-Québec, the giant utility in la belle province, Monday morning doubled a planned bond sale to $1-billion. For all the talk of a worsening credit crunch, demand from investors for top-notch credits means Hydro-Québec is able to borrow long-term at almost the same absolute rate as a year ago, and significantly cheaper than just three months ago.
It's still only the highest-quality names that can come to market, but with bond funds looking for places to put the big coupon payments they're receiving there are more and more treasurers testing the market.
Hydro-Québec, one of the country's biggest borrowers, is paying 1.3 percentage points over the yield on the 2037 Government of Canada bond for the bonds it's selling, which are due in 2050. National Bank Financial is leading the deal.