The increasing role of hedge funds in Government of Canada bond auctions

Adam Epp and Jeffrey Gao

No 2025-22, Staff Analytical Notes from Bank of Canada

Abstract: We find that the rise in Government of Canada debt issuance correlates to growing participation of hedge funds in bond auctions since 2020. This increased participation supports the cost-effective distribution of Canada’s debt, but it also represents a potential vulnerability because hedge funds have a greater flight risk than other investor types.

Keywords: Debt management; Financial institutions; Financial markets; Financial stability (search for similar items in EconPapers)
JEL-codes: D4 D44 G1 G12 G2 G23 H6 H63 (search for similar items in EconPapers)
Date: 2025-10
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocsan:25-22

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