Capital Markets

Performance

Through the timing of debt issues and related hedging, the cost of borrowing for the Province and OEFC during 2003-04 was estimated at $116.6 million better than the benchmark, on a present value basis. This performance measure compares the actual cost of borrowing against a benchmark of hypothetical domestic borrowing of the same term spread out evenly over the fiscal year based on projected borrowing requirements. Debt management activities resulted in savings of $9.9 million in 2003-04. For the money market program, savings of $2.5 million over the 45 day benchmark were achieved.

Objectives for 2004-05

The Province’s long-term public borrowing program is projected at $23.8 billion, primarily consisting of $16.1 billion to refinance maturing debt, $2.2 billion for the deficit and $1.0 billion as a provision for early debt redemptions. The domestic market again will be the primary source for Ontario’s borrowing program. However, international capital markets will be monitored and foreign markets will be accessed when total borrowing costs are lower than those in the Canadian domestic market. The OFA will build on the success of its bond auctions and domestic MTN program.

Cost-effective borrowing and prudent debt management strategies will continue to be key objectives for the OFA, particularly over the medium term. The OFA will maintain a flexible approach to borrowing by seeking out diversified borrowing opportunities that minimize debt servicing costs.