Canadian debt markets were strong in the first quarter according to a reported issued Tuesday by the Investment Dealers Association of Canada.

According to the Review of Debt New Issues and Trading Q1 2003, Government of Canada gross bond issuance totalled $12.3 billion in 28 new issues, 35% lower in value compared to the same quarter last year.

Trading in federal bonds totalled just above $1 trillion, reflecting an increase of 7% on a yearly basis. Real return bond trading was $5.9 billion, more than tripling in value from the same period last year.

Provincial gross bond issuance totalled $5.5 billion in 62 new issues, an increase of 18% in value compared to Q1 2002. With the continuing decline in federal government bond issuance, both corporate and provincial bonds are playing a more active role in Canadian debt markets. Trading of provincial bonds totalled $92.6 billion, increasing 9% over Q1 2002.

Corporate debt issuance was $11.5 billion, an increase of 42% over the same quarter a year ago. Significant issuers included GE Capital Canada Funding Company raising $1.1 billion and Hydro One Inc. leading corporate issuance with 12 issues for a total of $2.6 billion.

Trading in money market instruments was down by 10%, totalling $1.1 billion in the quarter. T-bill trading improved measurably while trading of Bankers’ Acceptances and Commercial paper were down 18% and 15% respectively compared to the same quarter a year earlier.