Even in the face of mounting economic uncertainty, a Canadian corporate debt binge is growing unabated as businesses retool in the face of trade war threats and foreign entities flock to Canada in ever-greater numbers.
During the first nine months of 2025, Canadian businesses have issued more than $76-billion in corporate bonds, according to LSEG Data & Analytics, putting the market on track to surpass 2024 levels. With a full three months of activity still to count, the 2025 figure has already eclipsed the annual totals from 2022 ($48.8-billion) and 2023 ($69.7-billion).
Rampant mergers and acquisitions are partly responsible for the rush to borrow, but much of the elevated issuance is coming from a rash of new companies entering the Canadian debt market, including large foreign businesses issuing bonds in Canada at nearly unprecedented levels.
“We are at a record pace this year and we are well ahead of last year already − and last year was an all-time record in terms of issuance in the Canadian debt market,” Abeed Ramji, head of Canadian debt capital markets at TD Securities, said in an interview.
“Last year it was hard to imagine surpassing those levels, but here we are.”
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Low interest rates are attracting companies that previously relied on other funding options, such as bank loans. Combined with new issuers at home and the flood of foreign companies tapping the domestic corporate debt market from abroad, businesses generally just need more capital to build costly data centres and restructure supply chains in response to protectionist risks.
And despite all the new supply, investors are gobbling up every deal that emerges.
“Investors cannot get enough,” Mr. Ramji said.
The official stats don’t actually tell the whole story. Maple deals, which refer to non-Canadian companies issuing Canadian dollar-denominated bonds in the Canadian market, are not included in LSEG data and are also soaring.
From Jan. 1 through Sept. 25, RBC tracked more than $14-billion worth of maple transactions, putting that subset of the market on track for its second-best year, with only the dealmaking frenzy of 2021 delivering larger maple numbers.
The demand for maple bonds is partly due to a technical change implemented at the start of 2025, when newly issued maple bonds started getting included in the FTSE Canada Universe Bond Index. That change gave maple issuers access to a much larger pool of investors, including the massive contingent of investors that own index-tracking funds.
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The increased liquidity from passive investors also gives active investors who were already buying maple bonds a reason to buy even more, further bolstering demand.
McDonald’s Corp. MCD-N and BNP Paribas BNPQY raised $750-million and $650-million respectively in Canadian debt markets during the third quarter alone, according to RBC data. In May, four months before announcing a Canadian expansion plan, Citigroup Inc. C-N raised $1.5-billion.
Corporate credit spreads, meanwhile, are near record lows. Because they measure the difference in yield between a corporate bond and a risk-free government bond, such narrow spreads imply investors perceive very little risk in lending to Canadian businesses.
Those businesses have, in turn, used that investor confidence to their advantage. According to Sean Gilbert, global co-head of debt capital markets at Canadian Imperial Bank of Commerce, more companies are issuing what are known as hybrid bonds instead of the more traditional senior bonds. Hybrid bonds offer a higher yield to investors but have a junior subordinated status, meaning they would be a lower priority for repayment in the event a business defaults or goes bankrupt. That isn’t a problem as long as investors remain confident in the company’s ability to survive.
Credit ratings agencies treat them as 50 per cent debt and 50 per cent equity, hence the term “hybrid,” which allows businesses to raise more money without risking a downgrade or diluting their existing shareholder base. For example, if a company wanted to raise $1-billion, issuing $500-million worth of senior bonds and selling $500-million in new stock would have the same credit rating impact as issuing the full $1-billion in hybrid bonds.
That structure, combined with such tight spreads, is motivating Canadian companies to issue hybrid bonds in droves. As of Sept. 25, roughly $9.6-billion worth of Canadian corporate hybrid bonds have been issued since the start of 2025, RBC data shows. In 2024, nearly a record-setting year for Canadian corporate bond issuance overall, total hybrid issuance was just $1.1-billion.
That 2025 figure might appear low relative to the more than $50-billion in debt corporate Canada issues in any given year. But for perspective, consider that Canadian companies issued a total of $8.9-billion in hybrid debt over the five most recent calendar years, from 2020 through 2024, or $700-million less than what has been issued so far in 2025 alone. And the year is not over.
Telecoms have made particularly liberal use of hybrid debt in 2025, CIBC’s Mr. Gilbert said. Telus Corp. T-T, Bell Canada Inc. BCE-T and Rogers Communications Inc. RCI-B-T have collectively issued more than one third of the hybrid bonds issued so far this year, according to CIBC data.
The market has also experienced a massive infusion of fresh corporate blood in recent months as more businesses are issuing bonds for the first time. Mr. Ramji said more than 50 companies have entered the Canadian bond market since the start of 2024, compared with just nine new names over the course of 2023.
“We are seeing a massive uptick in inaugural names that have accessed the market, so new issuers altogether,” Mr. Ramji said. “This is a cohort of companies that have typically relied on bank funding and leaned on that, but now they are seeing the institutional market offer up some very attractive alternatives to tapping their bank lines, for instance”
“These are rates that investment-grade issuers were finding not too long ago and now you are seeing high-yield companies come to the market at very attractive funding costs,” he said.
Amid all that growth in supply, investor demand for Canadian corporate debt appears insatiable. Since the start of this year, demand for Canadian corporate bonds has ranged from 2.4 times available supply to as high as 5.4 times, RBC data on average oversubscription rates show. That means that even on the low end of that range, average demand has consistently more than doubled average supply.
The voracious investor appetite is partly because of the positive feedback loop that can form when fixed income investors receive their coupon payments and choose to reinvest them into the same asset, which happens more often when those assets are performing well.
“The market has demonstrated that there is very strong liquidity,” said CIBC’s Mr. Gilbert. “We are seeing bond funds get lots of inflows. Because of all the issuance over the last couple of years, we are seeing elevated or record coupon payments.”
TD’s Mr. Ramji also said fund flows are a big part of the explanation for investors’ seemingly bottomless appetite for corporate bonds.
“There are a lot of general course interest payments that come through from the bonds they already hold,” he said. “So there is a lot of cash that they have to put to work.”
Private lenders, meanwhile, are also enjoying a windfall of interest in their services.
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Jeffrey Deacon, managing partner of Private Debt Partners, said his company has already looked at four times the number of transactions compared with the same point in 2024.
“The volume of opportunity has been astounding this year,” Mr. Deacon said in an interview. “There is just a mountain of opportunity and the challenge is wading through it.”
Alternative credit has become a much more mainstream option for Canadian companies over the past five to seven years, Mr. Deacon said.
The rise of private credit has accelerated in Canada over the last year in particular, according to a recent report from professional advisory firm MNP LLP, as companies that are more exposed to economic headwinds such as tariffs have struggled to secure traditional financing.
“Private credit emerged as a vital support system for Canadian business owners and entrepreneurs amid the uncertainty of the past year,” the report, published on Oct. 7, said. “An estimated $5-trillion to $6-trillion in assets could migrate to non-bank lenders over the next decade, reshaping the lending landscape.”
Shilpa Mishra, managing director of MNP’s corporate finance team and one of the authors of the report, said private lending now comprises 40 per cent of the corporate lending market in Canada.
“That 40 per cent is more active than ever,” Ms. Mishra said in an interview.
Her report highlights collaboration between banks and private lenders as an emerging trend, where the bank provides operating lines of credit while partnering with private credit providers for specialized financing such as real estate or equipment.
Bill Wu, leader of the Canadian debt capital markets advisory team for Ernst & Young LLP, said total assets under management in the private credit market is projected to double from roughly US$1.6-trillion as of late 2023 to nearly US$3-trillion by the end of 2028.
Lenders are also getting more comfortable with the increasingly volatile nature of the economy, Mr. Wu said. Corporate borrowing rates drastically slowed earlier this year, after what U.S. President Donald Trump dubbed “Liberation Day” on April 2, when his administration announced global tariffs and international trade war concerns were at their peak.
“During the second quarter, our observation was lenders were being very selective,” Mr. Wu said. “Lenders in general now have a lot more capital because capital that should have been deployed in the second quarter got held back.”
Ms. Mishra compared the current situation to the aftermath of the 2008 financial crisis, when global investors saw Canada as a safe haven compared with the U.S.
“Investors all across the board see Canada’s capital markets as a steady ship in turbulent waters,” she said. “That is why there is so much money coming into our country. The uncertainty will continue, but Bay Street isn’t stopping.”