Wellington Weekly
Wednesday Market Note (Incl. An ECM Update)
February 05, 2025
Subs -
WE ARE LIVE.
Qualified Canadian Readers Only.
The week was off to a rocky start following the announcement of an impeding North American trade-war that was set to start yesterday morning. As most are aware, the U.S. was expected to place a 25% tariff on all Canadian goods (excluding energy), and a 10% tariff on Canadian energy. Canada responded with a $150 Bn 25% tariff package on U.S. goods, along with the cancellation of provincial-U.S. contracts. The Canadian stock marketed opened Monday morning down 1.5%, touching a low of -3%, and closing the day settling down 1.1%. Volatile to say the least. The tariff war has been stalled for 30-days, but let’s briefly dive into Canada’s global trade positioning thanks to Scotiabank:
Canada’s overall exports accounted for $965 Bn in 2023. Energy accounted for $174 Bn.
18% of Canadian exports were driven from energy, followed by automotive/parts (11%), metals and mining (10%), and consumer products (9%).
Ontario and Alberta account for 60% of total national exports.
The U.S. accounts for 77% of Canadian exports, while no other country accounts for more than 5% of export volumes.
On the other side of the trade balance:
Canada imports $978 Bn of goods.
15% of total imports were consumer products, followed by automotive/parts (15%).
Ontario and New Brunswick account for 75% of Canadian GDP.
44% of Canadian imports come for the U.S.
The Canada-U.S. balance is such:
Including energy, the U.S. trade balance was a -$41 Bn deficit - including energy, a $63 Bn surplus.
Trade between the two countries accounted for 77% of total Canadian goods exports, and 63% of goods imports, while only 18% of U.S. goods exports and 14% of U.S. goods imports.
If a U.S.-Canada trade war were to unfold for a reasonable period of time, it’s fair to assume the Canadian economy would enter a recession, the CAD would decline >5% further, and our Canadian independent banks would shutter. For those that are interested in learning more about the impact tariff’s have to inflation the the economy, the BoC published a great piece here. No need to dust off your international trade textbooks.
For now, no point in being doom and gloom, so we continue with our normal course programming.
Since last week’s Wellington Weekly, equity markets printed decent volume across new issues, grossing $125 MM across 8 common and unit equity deals. Vior Inc. was the largest offering of the week, totaling $40 MM (inclusive of a $10 MM flow-through portion). 6 of the 8 equity deals printed last week were in the mining square, 1 in the blockchain sector, and 1 underpinned by medical devices. And we thought a little trade war would put a pause on deal activity…
In the non-bank debt market, Granite REIT issued $300 MM of floating rate debentures. The REIT debenture offering was led by Scotia, TD and Desjardins.
Yesterday afternoon Infor Financial announced the hiring of Calgary-based energy banker Greg Saksida. Infor continues to make a push in the oil-patch following the completion of its Source Energy and Kerrobert Fuels debt advisory mandates during 2024. The hiring follows a large pullback seen over the past couple years across Calgary investment banks - notably, GMP First Energy.
Lastly, congratulations to the winner of last week’s hat giveaway. I’ve reached out to the winner for delivery details. Please check your spam folders!
ECM World
Top Notable Transactions
Borealis Mining
$10 MM Bought Deal of Units
Haywood w/ SCP
Spirit Blockchain
$3 MM Marketed Offering of Units
Agents: CG w/ Leede
Legal: Fasken (Issuer) Wildeboer (Agents)
Conavi Medical Corp.
$5 MM Marketed Offering of Units
Agents: Bloom Burton
Legal: Mintz (Issuer) Baker & McKenzie (Agents)
Cheers,
G.G.