June 4, 2024
Daniel Garant, Executive Vice President & Global Head of Public Markets recently spoke at BCI’s 2024 Investor Day, where he provided insights on the launch of our Funding Program, the importance of diversification, managing default risk, and how artificial intelligence (AI) is being used in our public markets portfolio.
How was BCI’s first debt issuance received by the market?
We received a top-tier, long-term credit rating of AAA from major global rating agencies, signifying BCI’s strong financial standing, excellent creditworthiness, and low risk for investors. There was strong demand for our inaugural bond issuance leading to a second offering, to which both were oversubscribed.
We are now at 89 per cent leverage through repurchase agreements and 11 per cent unsecured debt. Over time, we expect to bring it closer to a 50/50 split, which means bond issuance of about $1.5 to $2.0 billion annually depending on market appetite and conditions.
What is your current view on public markets?
Despite long-term valuation impacts, public markets have shown resilience, resulting in strong performance over the year. We have been able to adapt our active management strategies and maintain a diversified portfolio to navigate challenging markets, and we continue to focus on long-term growth within the global markets.
Can you mitigate default risk in a rising rate environment?
Our strategic approach has been to navigate the rising rate environment while maintaining a nimble and agile credit strategy. We’ve successfully sourced opportunistic deals, leveraging our expertise to investments that align with our long-term objectives.
Our risk management practices have been instrumental in maintaining a low default rate, reflecting the strength of our portfolio even amidst industry-wide challenges. We continue to prioritize diversification and rigorous economic analysis to inform our decisions and mitigate default risk. Our recent commitments to the Asia Pacific region is a strategic move that underscores our dedication to growth and innovation. By staying ahead of market trends and focusing on sustainable investment practices, we are well-equipped to mitigate risks and capitalize on new opportunities.
How is AI being considered in your investment strategies?
We are focused on carefully evaluating the risks and opportunities of AI and how it should be factored into investment decisions and our clients’ portfolios. Internally, BCI is already leveraging AI to enhance work processes and manage large sets of data more efficiently. We have seen the valuations of certain sectors like semiconductors and software grow substantially as a result of the proliferation of AI and expect these trends to continue to impact the market.