The reformed SSA trader: A new-found dog

2 minute read

Newfoundland and Labrador, the Canadian province, has announced a new program for issuing debt into the European Sovereign, Supranational and Agency Debt (SSA) market. The follow-on proclamations are surprisingly light on detail on the substantial expansion of ultra-deepwater oil and gas drilling efforts in the province.

This short note discusses and analyses the implications for potential investors as well as for the European Central Bank. Newfoundland and Labrador is on a path to double its oil and gas production by 2030, with several large-scale sites currently being developed.

This provides a backdrop to the news that NF has announced it is preparing to sell bonds in the European SSA sector, following in the footsteps of the carbon-intensive Province of Alberta. The announcement seems to indicate that the forthcoming bonds will be for general corporate purpose (GCP) borrowing, although the issuer is making a tentative link to the Muskrat Falls hydropower project.

For purposes of bond investor analysis, however, the GCP format means that exposure will more likely be on the side of the new oil and gas expansion happening in the province rather than already finished and financed hydropower.