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Canadian borrowers continue to tap debt market

For all the headlines on problems in the credit markets, high quality issuers can still sell debt.

The province of Ontario sold $600-million of five year bonds late Tuesday in a deal led by BMO Capital Markets. That debt, which added to the size of an existing issue, went out the door at premium of 94 basis points to the benchmark government of Canada five-year bond.

Another bond sale that speaks to international interest in strong domestic credits came from the government-backed Export Development Canada, which sold $1-billion (U.S.) of debt. That three-year issue was led by Credit Suisse, HSBC, Merrill Lynch, and RBC Capital Markets.

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The fact that these large bond offerings are finding buyers speaks to what the fixed income crowd jokingly calls a "fright to quaility." (They are playing on the 'flight to quality' line.) All that cash being pulled out of equities is finding a home in top-rated governement debt, and Ontario and the EDC offer a high degree of safety, with a bit more interest rate juice than T-bills.

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