After a spectacular year in 2005, Canada’s fixed income market kicked off 2006 on a tear. Total debt financings soared to a hefty $43.7 billion in the first quarter, an increase of 13.9% quarter-over-quarter and 8.6% year-over-year.

On the trading front, total debt traded at a record $1.7 trillion in the first quarter, an increase of 15.3% quarter-over-quarter and 19.9% year-over-year.

The quarterly results were released today in the IDA – Industry Association’s quarterly report, Review of Debt New Issues and Trading.

Despite higher interest rates, overall credit conditions remained conducive for borrowing in the first quarter. The robust financings, largely fueled by the corporate sector, bolstered corporate issuance to $22 billion in the first quarter of 2006.

Meanwhile, Maple bonds (debt denominated in Canadian dollars, but issued by foreign companies) continue to flourish and represent a rapidly growing segment of Canada’s fixed income market. While government financings edged up in the quarter, borrowing remained on a downtrend, off 21.7% from the same period a year ago.

Corporate bond issuance totalled $22 billion in Q1 06, up 17.7% from Q4 05 and up 49.9% from Q1 05.

Government of Canada bond issuance reached $12.7 billion in Q1 06, up 8.9% from Q4 05 but down 21.7% from Q1 05.

Provincial bond issuance was $8.7 billion in Q1 06, up 37.7% from Q4 05 but down 3.4% from Q1 05.

Trading in Government of Canada bonds totalled $1.5 trillion in Q1 06, up 16.3% from Q4 05 and 17.6% from Q1 05.