RBC president and CEO Dave McKay speaks at the First Nations Major Projects Coalition conference in Toronto on April 30.Sammy Kogan/The Canadian Press
Royal Bank of Canada is advising Ontario on a $500-million bond to fund defence projects, adding to support rolling out from the country’s institutional investors for the previously neglected sector.
The provincial government on Tuesday said it would be issuing a “resilience bond” as part of its bid to host the headquarters of the Defence, Security and Resilience Bank – a multilateral institution dedicated to financing defence projects – in Ontario. The province says the bond would be the first of its kind in Canada.
The bond is slated to raise at least $500-million, and the process could include a syndicate of banks aiming to issue it for early summer.
The initiative between the province and RBC, Canada’s largest bank, has come together in recent months, according to three sources familiar with the matter.
The Globe and Mail is not naming the sources, who were not authorized to speak publicly on the matter.
The Globe reported in April that the DSRB would be headquartered in Canada, after negotiations involving 19 founding countries concluded in Montreal. The host city has yet to be determined.
Canada chosen as host country of multinational defence bank
Ottawa and Toronto are both vying to be the host city if the institution lands in Ontario, though the provincial government has put all of its support behind Toronto. In the coming months, the federal government is expected to decide where to establish the headquarters.
Ontario said the bond would be structured according to its sustainable bond framework, which it launched in 2024 to broaden its support for green, social and sustainability projects. The bond will specifically support defence and security infrastructure, including a focus on cybersecurity and digital resilience, emergency response capabilities and rescue technologies, monitoring and defensive measures.
The province said the bond could also be used to help finance the initial set-up and early operations of the defence bank, and will be mainly sold to institutional investors.
RBC declined a request for comment from The Globe.
Canada’s banks have historically been hesitant to finance defence projects and companies because of lending and reputational risks. In recent months, lenders have been increasing their support for the industry, as Ottawa ramps up spending in the sector against the backdrop of escalating geopolitical tensions.
Investor interest in the sector has spiked, sending the share prices of defence companies soaring.
In April, RBC chief executive Dave McKay told The Globe that the private sector must play a bigger role in supporting the defence sector and industries that support critical infrastructure. He pointed to the United States as an example of how public and private capital “co-exist to get a greater return” on military and industrial initiatives.
RBC is the seventh-largest bank in North America by market capitalization and its capital markets unit is a powerhouse. Its division in the U.S. – the largest defence market globally – includes offices in more than 200 cities across 43 states.