Canada’s defence buildup is starting to develop its own capital-markets infrastructure, with Scotiabank establishing a framework that could eventually let investors buy bonds specifically tied to defence, security, critical infrastructure, and strategic technology financing.
The bank published its Canadian Defence Issuance Framework on Tuesday, describing it as Canada’s first dedicated framework for labelled defence instruments. It would allow Scotiabank to issue Canadian Defence Bonds and other instruments, with proceeds used to finance or refinance eligible activities.
The framework establishes eligibility criteria, governance, and reporting requirements for future issuances. Scotiabank said Sustainable Fitch independently assessed the framework and found it consistent with emerging defence-financing practices.
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The bank, which reported approximately $1.5 trillion in assets as of July 31, said the assessment was the first globally for such a framework.
The timing puts Scotiabank ahead of a potentially large Canadian capital requirement. Prime Minister Mark Carney said in May that Canada plans to invest $180 billion directly in defence procurement over the next decade and another $290 billion in defence and security-related infrastructure. The government intends to reach NATO’s target of spending 5% of GDP on defence and related security investments by 2035.
The Parliamentary Budget Officer has estimated that increasing core defence spending toward the NATO target would require roughly $33.5 billion in additional annual spending on average over the next decade.
Canada would not be inventing the defence-bond market. Daiwa Capital Markets reported that France’s BPCE became the first European financial institution to issue a dedicated European Defence Bond, raising €750 million in a five-year offering that attracted orders equal to 3.7 times the amount issued.
