New supranational, sovereign and agency issuers in Australia invariably hope to become familiar names in the market, building liquidity in their curves over time. But in recent memory none has delivered on this desire as fully as CPP, which now has six points on its Kangaroo curve including a green bond (see chart 5), and has printed five deals of A$1 billion or more.

Offering an attractive spread over government bonds proved effective for capturing demand when CPP first accessed the Kangaroo market in 2022. In the wake of the deal, leads noted that pricing was introduced to investors as an attractive spread to sovereign and semi-government paper.

Fast-forward to CPP’s A$1.5 billion 10-year bond priced on 22 February 2024, and this strategy has remained consistent – as has the issuer’s commitment to supplying the market regularly and building a curve through benchmark deals.

In February, Sam Dorri, Toronto-based managing director at CPP, told KangaNews: “Swap spreads and total return are relatively high in Australian dollars compared with other markets and, while not all investors operate on a total return basis, at some stage CPP at 100 basis points above ACGB [Australian Commonwealth government bond] becomes something investors more or less have to own.”

Dorri said the issuer’s other promise – to introduce new lines with substantial volume even if doing so requires a new-issue premium – is increasingly winning over domestic investors in particular.

He also suggested margin outcomes have improved because CPP did not prioritise pricing in the short term. In fact, in 2023 the Australian dollar was the second most cost effective of the five currencies CPP issues – ahead of euros, sterling and US dollars, and trailing only the issuer’s home market.

CPP is different from the provinces because it has assets in Australia and can therefore fund locally without swapping back to Canadian dollars. Dorri says this informs the issuer’s pricing and relevance, and supports the strategy of being a consistent, large-sized issuer through the cycle.

It therefore might not be appropriate to draw a straight line through from CPP to predict what might be possible for the provinces. But CPP’s work has undoubtedly laid down a series of markers for Canadian issuers. Another of these is its extensive investor engagement work – a task in which it had some additional freedom as a private-sector entity.

Once CPP had demonstrated the value of regional investor visits, it became easier for the provinces to follow up. Stephen Thompson, executive director, capital markets at Province of Alberta, explains: “CPP is not a similar credit to Alberta but its investor engagement laid the groundwork for the provinces to also do extended marketing. Prior to our deal, Alberta roadshowed through south-east Asia and into Australia at the time of KangaNews’s Debt Capital Market conference in March. CPP led us to penetration into the domestic Australian investor base we had not seen before.”

Jason Lewis, director, capital markets at Province of British Columbia, says prior issuance, including CPP’s, helped “plant the flag” for British Columbia.

He comments: “We recognise that some international investors view the provinces as somewhat interchangeable, even though we have very distinct credit profiles and stories. We want to ensure that, when it comes to do a deal, the Canadian brand remains well regarded and the ground is intact for the other provinces to follow.”