Ontario drops American banks from U.S.-dollar bond sale in first since 2011

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Ontario left American banks out of a US-dollar bond sale for the first time in almost 14 years, choosing Barclays Plc as its foreign bank to help manage a $2 billion debt issue.

Canada’s largest province sold 10-year bonds last week in a deal led by Barclays and three Canadian banks — BMO Capital Markets, Canadian Imperial Bank of Commerce and Bank of Nova Scotia. It’s the first greenback bond issue for Ontario since early January, shortly before Donald Trump’s inauguration.

The last time US banks were not involved in a US-dollar bond sale by Ontario was July 2011, Bloomberg records show. Since then, the province has done about 40 such deals. Bank of America Corp. was involved in the January sale; Goldman Sachs Group Inc. and JPMorgan Chase & Co. were the US banks on the one before that, in September.

The deal “was part of regular bond rotation and US banks were in no way deliberately excluded,” Colin Blachar, a spokesperson for Ontario’s ministry of finance, said in an email. “Bond issuance is run through the Ontario Financing Authority, which is an arms-length organization to government.” Questions to the OFA were referred back to the finance ministry.

Ontario Premier Doug Ford has expressed anger over US President Donald Trump’s tariffs, which have hit key sectors of the province’s economy. In March, after the White House unleashed its first wave of tariffs against Canada, Ford’s government released a policy that restricts public-sector entities in procuring from US businesses. The government ordered US-made wine and liquor pulled from the shelves of alcohol stores and said provincial building projects would focus on using Canadian-made materials, as much as possible.

But the policy doesn’t specifically state that the Ontario Financing Authority can’t give new business to US financial institutions.

Ontario is the center of Canada’s automotive industry, the home to assembly plants owned by General Motors Co., Honda Motor Co. and other manufacturers, and has large steel mills — sectors that have been specifically targeted by Trump in his tariff policy. The province’s unemployment rate rose to 7.9% in May, up more than a percentage point from a year earlier.

The province expects to borrow nearly C$60 billion ($43.8 billion) in this fiscal year to fund a growing budget deficit, and has said that as much as 30%, or nearly C$13 billion, may come from foreign markets. Other Canadian provinces are also expected to borrow more this year as an economic slowdown leads to wider budget deficits.

JPMorgan has already lost “a couple” of bond deals tied to the tariff uncertainty, with issuers opting for local banks instead, JPMorgan Chief Executive Officer Jamie Dimon said in April, without giving specifics.

Ontario isn’t the only province to break with American banks for foreign-currency bonds since the US began placing tariffs on imports from Canada earlier this year. In April, Alberta sold a €1.25 billion ($1.4 billion) bond without using Bank of America, a first in six years. That exclusion, which Alberta said at the time wasn’t the result of a blanket ban, aligned with the broader provincial move to reject US goods and services.

British Columbia, on the other hand, sold a $2.5 billion US-dollar bond on Wednesday using a syndicate group that included Bank of America and Citigroup. The western province also sold a euro bond with the help of JPMorgan late last month.

“Being an issuer in the US-dollar global bond market can include US banks among the lead managers and support competitive and efficient access to international US dollar investors, as well as strong secondary market performance,” a spokesperson for BC’s finance ministry said via email.