The Cedar LNG project under construction in Kitimat, B.C., in August. The project is the first Indigenous majority-owned LNG facility in the world.Jesse Winter/Reuters
Bank of Montreal is offering a new way to finance Indigenous companies and communities.
Late Thursday, the lender issued what it believes to be North America’s first Indigenous-labelled bond, and said proceeds from the $200-million offering will be allocated to Indigenous-owned businesses and communities across Canada.
The novel debt product, which is expected to close on Oct. 27, is the latest in a series of new financial resources being developed for Indigenous economic development. Many of those efforts are focused on funding Indigenous equity participation in major infrastructure projects.
Any Canadian investor holding a stake in bond funds with a sustainability mandate will potentially end up indirectly owning a piece of the first Indigenous-labelled bond, according to Jonathan Hackett, BMO’s head of sustainable finance.
“The way an investor usually gets access to this is through a dedicated fixed-income fund,” Mr. Hackett said in an interview. “A lot of our fixed-income investors will have a sustainable bond fund or a green bond fund that has a dedicated mandate to acquiring these kinds of products.”
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BMO has been developing this product over the past year, Mr. Hackett said, partly in response to investor demand, which he hopes will encourage Canada’s other major banks to launch similar products.
“One of the precipitating factors that we have had is investors coming to us and saying we would love to buy Indigenous-labelled debt,” Mr. Hackett said. “Part of the goal is to make sure that we are putting out signposts to others of the excitement we see from the investor community on these types of assets and the broader impact of what we can do here.”
Cedar Leaf Capital, Canada’s first majority Indigenous-owned investment dealer, is serving as co-manager on the bond issue. Since launching in 2024, Cedar Leaf has joined several prominent dealer syndicates, including those of the Canada Pension Plan Investment Board, the government of Alberta and First Nations Finance Authority.
Modelled on the Municipal Finance Authority of B.C., FNFA functions much like a provincial government by issuing debentures (a type of bond) to finance infrastructure projects for the communities under its purview. In June, FNFA launched its first 30-year bond for $350-million, pushing its total loan portfolio beyond $3.4-billion, with support from Cedar Leaf.
That bond contributed to financing the Haisla First Nation’s majority equity ownership of the Cedar LNG project on the B.C. coast.
Separately on Thursday, FNFA issued its 14th debenture since it was established in 2014, raising an additional $435-million with its first five-year bond.
Several government programs have also been recently established to help Indigenous communities borrow money at more reasonable rates.
Because the federal Indian Act prevents Indigenous Canadians from owning reserve land – reserves are legally considered Crown land that has been designated for Indigenous use - it cannot be used as collateral for loans.
The Canada Indigenous Loan Guarantee Corporation (CILGC), established in late 2024 as a subsidiary of a federal Crown corporation called the Canada Development Investment Corporation, is a key example of such a program.
Originally tasked with providing up to $5-billion in loan guarantees for Indigenous communities across Canada looking to make major economic investments, the CILGC is the result of more than a decade of lobbying by groups such as the First Nations Major Projects Coalition.
On March 21, just one week after being sworn in as Prime Minister, Mark Carney announced Ottawa would double the CILGC’s funding authority to $10-billion. At the time, the First Nations Major Projects Coalition said at least $50-billion will be needed over the next 10 years to finance Indigenous equity investments in major projects on Indigenous land worth a combined $630-billion.
BMO’s Mr. Hackett said it is important to signal to fixed-income investors that Indigenous-focused lending is a growing area of investment and that they should expect to see more related products come to market.
“When you look at all of the large infrastructure projects around this country, all of that is going to require a financing of Indigenous equity participation,” he said. “Anything we do to advance that by showing what can be done ourselves is important.”