Canadian provinces brace for rising U.S. borrowing costs
Canadian provinces are bracing for rising borrowing costs as looming U.S. tariffs threaten to curb economic growth. Bloomberg reported that shrinking trade could lead to lower provincial tax revenues, potentially higher borrowing needs and lead to higher provincial debt risk premiums. Also read: U.S. companies hoard Chinese goods amid tariff uncertainty Dominic Lapointe, director of macro strategy at Manulife Investment Management, said the impact of potential tariffs is not yet reflected in provincial debt spreads but could soon exacerbate financial challenges. Analysts including Canadian Imperial Bank of Commerce expect that even a 20 per cent tariff could widen provincial spreads on the 10-year Treasury note by as much as 12 basis points. With provinces expected to borrow about $135 billion in fiscal 2025, the additional borrowing costs could translate into about $162 million in additional interest per year. Ontario, Canada's largest province, recently sold C$750 million in bonds, a 60 basis point spread over the government's benchmark. This highlights investor…
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