CANADA’S BOND MARKET MAY BE BUILDING A LEVERAGE BOMB.
Hedge funds now buy 40–50% of new Canadian government bonds, often using short-term borrowing.
Asset managers’ repo borrowing has reached around $300 billion, with just five hedge funds controlling nearly 70% of some major bond trades.
The Bank of Canada warns that if funding dries up, these funds could be forced to sell bonds at once, sending yields and borrowing costs sharply higher.
Canada isn’t in a bond crisis yet, but the risk is growing.
Hedge funds now buy 40–50% of new Canadian government bonds, often using short-term borrowing.
Asset managers’ repo borrowing has reached around $300 billion, with just five hedge funds controlling nearly 70% of some major bond trades.
The Bank of Canada warns that if funding dries up, these funds could be forced to sell bonds at once, sending yields and borrowing costs sharply higher.
Canada isn’t in a bond crisis yet, but the risk is growing.
