All bonds have traits that make them special, and the maple bond is one whose defining feature is that it allows foreign issuers access to the Canadian debt market.
A maple bond is a bond that’s issued in Canadian dollars and in the Canadian fixed income market, but by a foreign issuer.
These bonds can be bought and sold on the secondary market, but they aren’t as liquid as domestic bonds. That’s because they tend to have a smaller investor base and they they’re not in the main part of the domestic bond index.
Investors typically buy a maple bond to diversify their holdings within an industry, issuer or term that they can’t buy in their domestic market. Maples provide a chance to invest in foreign companies without having to manage currency exchange fluctuations.
Many countries offer foreign-issued bonds, and in each case, the foreign issuer assumes the currency risk.
What tends to draw investors and issuers to maple bonds, however, is Canada’s sturdy financial system and its well-organized foreign exchange derivatives market.
But a maple bond isn’t something that’s available (or right) for everyone.
The maple market is mainly focused on corporate issuers, and like all investments, not without risk.
To find out more about the Maple Market check out: Maple Market: What Is It and Why Would Issuers or Investors Use It? and What Boosts Interest in the Maple Market?