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(Bloomberg) — The Canadian territory of Yukon is planning to sell another C$200 million ($146 million) in bonds before March 31, 2026, following its inaugural issuance last week.
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The borrowing will help fund infrastructure investments such as roads, a fiber-optic line and an airport runway in its capital, Whitehorse, Maxime Mazoullec, an assistant deputy minister of finance for Yukon, told Bloomberg News. “The exceptional investment over the last five years created a temporary need for some additional financing.”
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Yukon raised C$200 million last week in a deal that was multiple times oversubscribed, Mazoullec said. It was the first time Yukon sold debt in its own name.
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The proceeds will be used for general purposes and is an effort to convert short-term financing to long-term debt at a fixed rate, he said.
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The federal government funds some of Yukon’s infrastructure projects, but requires the territory to contribute. The territory will receive C$1.5 billion from Ottawa this fiscal year.
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Aside from the next C$200 million tranche, Mazoullec doesn’t anticipate other long-term borrowing needs, and expects the territory to reduce debt levels over time.
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Mazoullec acknowledges liquidity could be an issue with Yukon’s bonds, but said the concern is outweighed by the territory’s favorable credit.
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Investors liked that the territory has a low debt-to-productivity ratio, reliable revenue from the federal government, and minimal exposure to Canada’s trade war with the US, Mazoullec said. Yukon has an AA rating from S&P Global Ratings that was reaffirmed in July.
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