Definition
The term maple bond refers to an indenture issued in Canada, in Canadian dollars, by a foreign bank or corporation. Maple bonds are issued when a corporation wishes to raise capital from investors located in Canada.
Explanation
Foreign corporations that wish to raise funds in Canada have the option of issuing what are known as maple bonds. These bonds are sold by non-domestic entities, including corporations, financial institutions and governments, and are issued in Canadian dollars. This is typically done when the interest rates in Canada are low relative to the foreign corporation's domestic rates, which lowers their interest expense.
Since the bond is issued in Canada's domestic currency, investors located in Canada are also insulated from currency exchange rate risk. Foreign companies will normally issue these securities if they have plans to establish operations in Canada. These bonds are also attractive to investors wishing to geographically diversify their portfolios.
The maple leaf first appeared in the coat of arms of both Ontario and Quebec back in 1896. It was later added to the Canadian coat of arms in 1921.
Related Terms
The term kangaroo bond refers to an indenture issued in Australia, in Australian dollars, by a foreign bank or corporation. Kangaroo bonds are issued when a corporation wishes to raise capital from investors located in Australia.
Moneyzine EditorNovember 6th, 2024
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