Foreign investment soars in 2009

Foreign investment managers bought Canadian securities in unprecedented amounts last year, Statistics Canada reported Thursday.

The agency said sales of Canadian securities totalled $109.4 billion. Three-quarters of that, or$82.5 billion, went toward Canadian bonds.

A strengthening Canadian dollar during 2009 made it cheaper for governments and corporations to issue debt denominated in U.S. dollars.

Foreign holdings of federal bonds increased by nearly 70 per cent in 2009, reversing a trend of declining foreign holdings going back to 2002.

In December, non-residents acquired $11.2 billion of Canadian securities, including $9.5 billion in bonds. Canadian purchases of foreign investments slowed to $663 million in December after increasing in November.

As rates for long-term Canadian debt rosecomparedwith short-term returnsin the second half of 2009, non-residents shiftedfrom federal treasury bills into longer-term bonds issued by corporations.

Non-residents added $1.2 billion of Canadian shares to their portfolios in December as Canadian stock prices appreciated 2.6 per cent during the month.

Canadian investment in foreign securities, which was up in November after four months of divestment, slowed to $663 million in December. Collectively, Canadians sold $801 million worth of foreign short-term paper while moving $337 million into longer-term foreign debt and $1.1 billion into foreign stocks.