Ontario leaves out American banks from U.S.-dollar bond issuance in a first since 2011

Globe and Mail

3 hours ago

For the first time in more than a decade, Ontario has issued a U.S.-dollar bond without the assistance of any U.S.-based banks.
The province sold US$2-billion worth of 10-year bonds last week with the help of British banking giant Barclays PLC, according to Bloomberg data. Three Canadian banks also helped manage the latest provincial debt issue: BMO Capital Markets, Canadian Imperial Bank of Commerce and Bank of Nova Scotia.
American banks have participated in every Ontario government U.S.-dollar bond sale since 2011, the data show. As recently as January of this year, the province sold US$3-billion worth of five-year bonds with the help of Bank of America Corp.
Ontario Premier Doug Ford had previously committed to banning U.S. companies from government contracts in response to the continental trade war launched earlier this year by U.S. President Donald Trump. However, Ontario finance ministry spokesperson Scott Blodgett said there is currently no prohibition on U.S. banks participating in Ontario bond issues.
In fact, Mr. Blodgett said, Bank of America remains a long-standing member of the banking syndicate that regularly assists with the sale of Ontario's domestic market bonds.
'U.S. banks were not 'dropped' from our bond sale,' he said in an e-mailed response to questions. 'Inclusion in any Ontario bond deal is a competitive process with financial partners around the globe vying for international mandates.
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'Several factors, including dealer availability, indicative pricing, consistent quality coverage, and participation on recent transactions is considered. Rotation is also considered with respect to participation on past deals as well as future deals.'
Last week's deal generated 'record interest for an Ontario 10-year USD deal,' Mr. Blodgett added.
In early March, Mr. Ford pledged to ban U.S. companies from all Ontario procurement contracts until the Trump administration removes tariffs from Canadian goods. The policy has subsequently faced criticism for exempting American companies with at least 250 employees in Canada.
For example, Bank of America, which boasts more than 1,000 Canadian employees working out of offices in Toronto, Montreal, Calgary and Vancouver, would qualify for such an exemption.
Alberta also avoided using a U.S. bank for a recent bond deal. In March, the province sold €1.25-billion ($1.95-billion) worth of 10-year bonds with the help of Barclays, RBC Capital Markets and TD Securities, according to public data and provincial records.
Alberta regularly taps Bank of America for its euro-denominated bond sales, though Marisa Breeze, spokesperson for provincial Finance Minister Nate Horner, said the change was not intentional.
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'There is no blanket ban on U.S.-based financial institutions,' Ms. Breeze said. 'The province is continuously monitoring and assesses the performance of the service providers employed for its funding activities and adjusts its borrowing syndicate based on that performance.'
Meanwhile, at least one other province has continued openly using U.S. banks for its U.S.-dollar bond sales. Bank of America and Citigroup Inc. were both part of the syndicate behind a US$2.5-billion bond issued by British Columbia last week. That syndicate also included BMO Capital Markets, National Bank of Canada and TD Securities.
'The province's inclusion of U.S. banks aligns with market practice among other Canadian issuers,' B.C. finance ministry spokesperson Shantel Esplen said in an e-mail. 'B.C.'s approach is the same as the government of Ontario, who continues to follow a policy which does not rule out inclusion of U.S. banks.'
Both the Canada Pension Plan and the federal government have also recently allowed U.S. banks to participate in their debt sales, Ms. Esplen said.