Canadian Fixed Income Conference
September 28-29, 2021
By Bloomberg Live
The 9th annual Bloomberg Canadian Fixed Income Conference convenes the biggest names in Canadian bonds, credit, commodities, and more, in a two-day virtual event on September 28-29, 2021.
As world economies seek to rebuild after the Covid-19 pandemic, these conversations have seldom been more relevant and timely. We gathered top investors, analysts, CEOs, CFOs, government officials, and bankers to discuss everything from insurance to real estate to mining to ESG to economics and more.
The morning session of Day Two featured sector-focused discussions on the economic landscape from the perspective of experts in the Real Estate, Energy, Mining, Insurance and Asset Management sectors. The session includes insightful and informative keynote interviews with CEOs from The Lion Electric Co., Bombardier, WSP Global and Québecor.
Click here to view video of today’s event.
* Marc Bédard, Founder and CEO, The Lion Electric Co.
* Leigh Chalmers, SVP, Head of Corporate Finance & Capital Management, Sun Life
* Patrick Decostre, President and Chief Executive Officer, Boralex
* Scott DiMaggio, Senior Vice President, Co-Head of Fixed Income, Director of Global Fixed Income, AB
* Daniella Dimitrov, Executive Vice President and Chief Financial Officer, IAMGOLD
* Steve Douglas, Senior Vice President and Chief Financial Officer, Hudbay Minerals
* Rodney D. Gray, Chief Financial Officer, Baytex Energy Corp
* Lars Glemser, Vice President and Chief Financial Officer, Vermilion Energy
* Halina von dem Hagen, Global Treasurer and Head of Capital Management, Manulife
* Martine Hébert, General Delegate in New York, Government of Quebec
* Tamara Lawson, Chief Financial Officer, QuadReal (BCIMC Realty)
* Alexandre L’Heureux, President and CEO, WSP Global
* Louis Marcotte, Executive Vice President and Chief Financial Officer, Intact Financial
* Éric Martel, CEO, Bombardier
* Pierre Karl Péladeau, President and CEO, Québecor
* Cecilia Williams, Chief Financial Officer, Allied REIT and Tamara Lawson, Chief Financial Officer, QuadReal (BCIMC Realty)
* David D. Wolf, Portfolio Manager, Fidelity Investments
* Ari Altsetdter, Reporter, Real Estate Americas
* Danielle Bochove, Toronto Bureau Chief
* Amanda Lang, Anchor
* Yvonne Yue Li, Metals & Mining Reporter
* Annie Massa, Reporter
* Kevin Orland, Canadian Finance Reporter
* Robert Tuttle, Canada Oil Markets Reporter
* Ethan Zindler, Head of Americas, Bloomberg NEF
The Economic Landscape for Real Estate
Cecilia Williams, Chief Financial Officer, Allied REIT and Tamara Lawson, Chief Financial Officer, QuadReal (BCIMC Realty), discussed the landscape of Canada’s commercial real estate market with Bloomberg’s Ari Altsetdter. Coming out of the pandemic, Cecilia Williams stated they would “We want to grow in urban cities, and we will look at whatever opportunities come up. We don’t intend to change our operating or investing focus. We will still very much be focused on distinctive urban workspace across Canada.” On the retail market, Tamara Lawson added: “The demand is really pivoting to prime destinations and convenience as the two main areas of focus in terms of retail. But, retail as an industry is doing well. It makes up a huge portion of our GDP. So, you know, we think there are opportunities, but, you know, it’s major urban centers.”
The Economic Landscape for Energy
Lars Glemser, Vice President and Chief Financial Officer, Vermilion Energy, and Rodney D. Gray, Chief Financial Officer, Baytex Energy Corp discussed the economic landscape of Canada’s energy market with Bloomberg’s Robert Tuttle. To maximize growth, Rodney D. Gray outlined Baytex’s key strategies: “Disciplined Capital, allocation maximizing, free cash flow, improving our leverage ratios and enhancing shareholder returns.” Their “number one priority,” “is to strengthen the balance sheet and hit debt targets.” Lars Glemser offered an expansive view on delivering “on all three components of the ESG discussion”: “I’m fairly positive I guess over the longer term that Capital will start to recognize that there are responsible producers of energy and we’re going to be doing the right thing from an ‘E’ perspective. What Capital Market providers need to do is make sure that we are also bringing on the social aspect of ESG– making energy affordable to consumers as well over the longer term.”
The Benefits of Green Energy for Investors
Patrick Decostre, President and CEO, Boralex discussed current and future financing strategies with BloombergNEF’s Ethan Zindler. Patrick Decostre shared that “We [Boralex] have not gone for corporate financing or corporate bonds in the past because we are financing our business with project financing. But a part of our strategy for 2025 is to obtain a credit rating and issue bonds in the future. If we can, I think green bonds should be at a lower cost, because it’s a lower risk. When you see all the actualities of the summer, we are not affected by that, because we’re in renewable electricity. And there would be no big change in our business if you are correctly diversified. It’s a way to protect the money of the investors, too.” Beyond direct investment, there are opportunities “for an investor to be a partner on the project basis, too.”
The Market for Electric Vehicles
Marc Bédard, Founder and CEO, The Lion Electric Co., discussed the electric truck market with Bloomberg’s Amanda Lang. Mark Bédard observes that “Customers are getting more and more sophisticated with respect to electrification, and the total cost of ownership. They understand that paying a higher sticker price that you will recoup through a number of years is really worthwhile as well. So not only are the people and the operators doing this for the planet, they are doing it to make money.” Bedard said he is expecting that the market will move quickly both in the public and private sector–investments from the Quebec government and the U.S, he suggested, point to this trend.
The Economic Landscape for Mining
Daniella Dimitrov, Executive Vice President and Chief Financial Officer, IAMGOLD, and Steve Douglas, Senior Vice President and Chief Financial Officer, Hudbay Minerals discussed the economic landscape of the mining industry with Bloomberg’s Yvonne Yue Li. Our speakers explored what many have called the “commodities supercycle”, specifically around copper and gold. Steve Douglas suggested that “The price of copper is in for a structural change because of decarbonization.” He explained that “the supply side of decarbonizing the world revolves heavily around copper.” For gold, Daniella Dimitrov reminded us that “The gold industry has spent the last number of years working out its mistakes of the past: bringing costs down, being more disciplined around capitalization, running reserves. I expect that discipline will continue.”
The Economic Landscape for Insurance
Leigh Chalmers, SVP, Head of Corporate Finance & Capital Management, Sun Life and Halina von dem Hagen, Global Treasurer and Head of Capital Management, Manulife, discussed the economic landscape of the insurance industry with Bloomberg’s Kevin Orland. Leigh Chalmers broke down some of the key trends in the life insurance industry on an international level. For instance, whereas trends amongst mortality claims were more diversified in the U.S because vaccination rates vary so heavily by state, mortality claims are following a more unified downward trend in Canada. In Canada, Chalmers reported, “We are starting to see a return back to normalized, pre-pandemic levels.”
Later, our panelists discussed how their financing strategies have changed in the pandemic. Halina von dem Hagen suggested that uncertainty has had its advantages. “When we entered the pandemic, we entered with strong capital levels, strong liquidity and very high quality asset portfolios. However, the volatile markets that ensued, the great uncertainty greatly affected my thinking horizon when it comes to pre-financing actions. We started thinking up to 12 months of pre-financing. Macro-uncertainty made this approach prudent, and low costs made it affordable. ManuLife has greatly diversified its funding sources.” She concluded that “looking for opportunities ahead of needs” is a “busy, but quite orderly process.”
The Outlook on Inflation
Scott DiMaggio, Senior Vice President, Co-Head of Fixed Income, Director of Global Fixed Income, Alliance Bernstein, and David D. Wolf, Portfolio Manager, Fidelity Investments, on the economic landscape of asset management with Bloomberg’s Annie Massa. The first key point of discussion was inflation. David D. Wolf predicted that inflation will carry forward, and offered insight on how fixed income investors should respond should his expectations come to fruition: “The consequences, I think, are pretty straightforward from a market point of view. Short end backs off, curve flattens, Canadian dollar goes up and certain businesses in Canada may have a harder time because of the effects of the tightening on the economy, which in this highly leveraged environment is likely to be pretty significant.”
Scott DiMaggio felt differently, arguing that inflation would decrease into 2022. “I think that rates are just too low considering that we are commencing a hiking cycle. I think the curve does steepen a bit and then eventually flattens. Our primary reason is really around the currency and that if the BOC [Bank of Canada] does go too early or it does a few hikes before the Fed reacts, we are worried that we will see a stronger CAD and the problems that potentially ensue from that to the Canadian economy.”
Regardless of which outcome surfaces, both guests agreed that inflation will be a “fiscal phenomenon” in Canada post-election.
The Market for Business Jets
Éric Martel, President and CEO, Bombardier, shared current and future strategies for the jet manufacturing company with Bloomberg’s Amanda Lang. Martel discussed the shift to the business jet market that was accelerated by the pandemic and whether that shift is here to stay. “We believe the majority will continue to fly on a business jet. Some people have elected to buy their own jet. So we also see a lot of customers that never purchased a jet before, coming to us. Plus, as I mentioned earlier, the fleet operators are seeing tremendous growth right now. We feel that trends are going to stay. Will there be a bit of leakage going back to commercial? Yes, there will be. But we feel that the majority of people that have adopted the business aircraft world will probably stay with us.”
The Impact of Commodity Prices on Infrastructure
Alexandre L’Heureux, President and CEO, WSP Global discussed the state of infrastructure with Bloomberg’s Danielle Bochove. When it comes to starting new projects, L’Heureux stated that “inadequate funding, or fear of inadequate funding,” is the biggest reason for postponing them, not, for instance, commodity prices. “[Clients] are aware that there’s a crunch right now and that proposal activity level is up. And that has not actually been a driver for delaying projects. We haven’t seen any cancellation, but we have seen some delays in converting the soft backlog into hard backlog. Because the needs are there right now and waiting another two or three years, just because commodities prices are up, I just don’t think for, generally speaking, for governments and a politician is a wise way of approaching the infrastructure spend.”
The Evolving Landscape for Telecommunications
Pierre Karl Péladeau, President and CEO, Québecor, discussed the evolution of the telecommunications industry with Bloomberg’s Amanda Lang. On whether the digital economy will replace the kind of advertising the media industry enjoyed in the past, Pierre Karl Péladeau stated, “The answer is clearly, ‘no’. The landscape is much bigger. I would say, certainly that we’re going to be able to migrate all this or we will try to migrate as efficiently as possible. Obviously there are segments of the population that are still looking for incumbent media. We’re going to try to capitalize on this audience and make sure also for a younger segment that what we’re broadcasting on television is also able to migrate to the digital environment.”
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