Review of Debt New Issues and Trading

Review of Debt New Issues and Trading 2002 in Review INVESTMENT DEALERS ASSOCIATION OF CANADA www.ida.ca Mixed Results in 2002 April 2003 The year was marked with poor equity markets and increasing global uncertainty on the economic and political fronts. The Bank of Canada tightened monetary policy in the first half of 2002. The yield curve flattened, with short rates rising and long rates falling during the year. The average term to maturity of Federal government debt increased (from 6.4 years in March 2001 to approximately 6.5 years in March 2002) due to an increase in the fixedrate share, the reduction of Tbill stock, and continued issuance of 30year bonds. Spreads between corporate and government bond rates widened over the year, predominantly at the long end, with increased uncertainty and many firms switching from shorter to longer term debt financing. Government of Canada gross bond issuance was 29% higher in value in 2002, with $61.4 billion and 114 issues, than in 2001. Trading was similar to 2001, at $3.81 trillion. Provincial gross bond issuance was 6% higher in value in 2002, with $19.3 billion and 161 issues, than in 2001. Trading, at $320 billion, rose slightly from 2001. Corporate debt financings in 2002 totaled $33.1 billion with 229 issues, down 14% in value. Significant issuers were GE Capital Canada Funding Company with nine issues totaling over $2.7 billion (9.5% of corporate issuance) and BCE Inc. with three issues totaling $2.0 billion (6.0% of corporate issuance). The Financial and Real Estate sector was the most active sector, accounting for 54% of corporate issuance. The year saw active corporate bond trading, 25% more active than last year, at $127 billion. Trading in money market instruments was down 4% in 2002 at $4.7 billion. While Tbill trading was up by %, trading of commercial paper and bankers acceptances was down by % and 4%, respectively. Canadian YieldtoMaturity Curve ly Comparison 6.0% 5.5% 5.0% 4.5% Yield 4.0% 3.5% 3.0% 2.5% 2.0% 0 1 2 3 4 5 6 7 8 9 Term to Maturity (s) avg. Q4/01 avg. Q2/02 avg. Q4/02 Note: Averages 3 endofmonth values for each quarter Source: Bank of Canada

Canadian Interest Rates The Bank of Canada tightened monetary policy in the first half of 2002, raising rates three times between April and July. The yield curve flattened over the year. Shorterterm interest rates in Canada rose during the year (1month Tbill rates were up by 60 bps). Longerterm rates declined during the year, with year Canadas down by 56 bps. Spreads between corporate and government bond rates widened over the year, predominantly at the long end, with many firms switching from shorter to longer term debt financing. Historical ShortTerm Interest Rates Bond Yields 9% 8% 7% 6% 5% 4% 3% 2% 1% 130 120 1 90 80 70 60 50 40 30 20 0 Spread (bps) 1Month Tbill 1Month Corporate 1Month Spread Note: 1Month Corporate = Prime Corporate Paper Rate Source: Bank of Canada Bond Yields Historical LongTerm Interest Rates 11% % 9% 8% 7% 6% 5% 160 150 140 130 120 1 90 80 70 60 50 40 Spread (bps) LongTerm Canadas LongTerm Corporates LongTerm Spread Notes: LongTerm Canadas = Government of Canada marketable bonds, average yield over years LongTerm Corporates = Average Weighted Yield (Scotia Capital Inc.) All Corporates LongTerm, over years Source: Bank of Canada 2002 in Review 2

Government of Canada Bonds: Trading and Issuance Trading was similar in value in 2002, at $3.81 trillion, from 2001, at $3.78 trillion. Issuance was 29% higher in value in 2002, with $61.4 billion and 114 issues, than in 2001, with $47.7 billion and 51 issues. ly Comparison of Government of Canada Bond Trading over Q4/01 $983.4 21% 24% Q1/02 $961.1 2% 5% Q2/02 $946.1 2% 3% Q3/02 $986.7 4% 21% Q4/02 $917.4 7% 7% Note: Excludes repos ly Comparison of Government of Canada Bond Issuance over of Issues over Q4/01 $14.189 48% 21% 18 29% 125% Q1/02 $18.848 55% 78% 31 72% 343% Q2/02 $14.853 21% 12% 14 55% 17% Q3/02 $14.121 5% 47% 39 179% 179% Q4/02 $13.568 4% 11% 30 23% 67% Note: Government of Canada Direct and Guaranteed Bonds, including Crown Corporations, total Gross New Issues Delivered, par value Gross New Issues Delivered 20 18 16 14 12 8 6 4 2 Total ly Canada Bond Gross Issuance and Trading 1,500 1,400 1,300 1,200 1, 1,000 900 800 700 600 ly Trading Gross Issuance Total Bond Trading 2002 in Review 3

Provincial Bonds: Trading and Issuance Trading was slightly higher in value in 2002, at $320 billion, from 2001, at $313 billion. Issuance was 6% higher in value in 2002, with $19.3 billion and 161 issues, than in 2001, with $18.2 billion and 136 issues. ly Comparison of Provincial Bond Trading over Q4/01 $79.9 8% 15% Q1/02 $84.9 6% 7% Q2/02 $82.1 3% 3% Q3/02 $79.0 4% 7% Q4/02 $74.0 6% 7% Note: Excludes repos ly Comparison of Provincial Bond Issuance over of Issues over Q4/01 $3.961 19% 9% 38 27% 9% Q1/02 $4.541 15% 12% 47 24% 27% Q2/02 $7.151 57% 71% 52 11% 68% Q3/02 $4.622 35% 6% 34 35% 13% Q4/02 $2.985 35% 25% 28 18% 26% Note: Total Gross New Issues Delivered, including Crown Corporations, par value Total ly Provincial Bond Gross Issuance and Trading Gross New Issues Delivered 8 6 4 2 90 80 70 60 50 ly Trading 40 Gross Issuance Total Bond Trading 2002 in Review 4

Corporate Bonds: Trading and Issuance Corporate bond trading was 25% more active in 2002, at $127 billion, than 2001, at $2 billion. Corporate debt financings totaled $33.1 billion with 229 issues in 2002, down 14% in value from 2001, at $38.5 billion with 255 issues. (Note: this data excludes capital trusts) Significant issuers were GE Capital Canada Funding Company with 9 issues totaling over $2.7 billion (9.5% of corporate issuance), and BCE Inc., leading corporate issuance with a $1 billion issue, for 3 issues totaling $2 billion (6.0% of corporate issuance). The Financial and Real Estate sector accounted for 54% of corporate issuance. ly Comparison of Corporate Bond Trading over Q4/01 $28.4 16% 34% Q1/02 $31.9 12% 31% Q2/02 $28.5 11% 15% Q3/02 $28.5 0.2% 17% Q4/02 $38.2 34% 34% Note: Trading data excludes repos ly Comparison of Corporate Bond Issuance over of Issues over Q4/01 $.817 64% 82% 73 46% 14% Q1/02 $8.115 25% 8% 60 18% 15% Q2/02 $8.162 1% 34% 52 13% 35% Q3/02 $5.787 29% 12% 44 15% 12% Q4/02 $11.044 91% 2% 73 66% 0% Note: Issuance data: Total Gross New Issues Delivered, par value 14 Total ly Corporate Bond Gross Issuance and Trading 40 Gross New Issues Delivered 12 8 6 4 2 35 30 25 20 15 ly Trading 5 Gross Issuance Total Bond Trading 2002 in Review 5

Sector Breakdown of Corporate Bond Issuance Top Corporate Bond Issues for 2002: 37 Over $300 Million % Total Issuer Sector Issuance BCE Inc. Other Q4 $1,050.0 3.17% Sun Life Assurance Company Financial & Real Estate Q2 $800.0 2.42% GE Capital Canada Funding Company Financial & Real Estate Q3 $750.0 2.27% BCE Inc. Other Q4 $650.0 1.96% DaimlerChrysler Canada Finance Financial & Real Estate Q2 $599.9 1.81% Toronto Dominion Bank Financial & Real Estate Q3 $550.0 1.66% Bell Canada Utilities Q1 $500.0 1.51% Greater Toronto Airport Authority Services Q1 $500.0 1.51% Capital Desjardins Inc. Other Q2 $500.0 1.51% Imperial Oil Limited Resources Q2 $500.0 1.51% Bell Canada Utilities Q4 $500.0 1.51% OMERS Realty Corp. Financial & Real Estate Q4 $500.0 1.51% Greater Toronto Airport Authority Services Q2 $475.0 1.43% Rogers Cable Inc. Services Q1 $450.0 1.36% GE Capital Canada Funding Company Financial & Real Estate Q3 $450.0 1.36% Canadian Tire Receivables Trust Financial & Real Estate Q4 $450.0 1.36% Ford Credit Canada Limited Financial & Real Estate Q1 $425.0 1.28% GE Capital Canada Funding Company Financial & Real Estate Q4 $425.0 1.28% Gloucester Credit Card Trust Financial & Real Estate Q2 $422.5 1.28% Bell Canada Utilities Q1 $400.0 1.21% Household Financial Corp. Financial & Real Estate Q2 $400.0 1.21% Canadian Credit Card Trust Financial & Real Estate Q4 $400.0 1.21% Merrill Lynch Canada Finance Company Financial & Real Estate Q4 $400.0 1.21% Associates Capital Corporation of Canada Financial & Real Estate Q1 $350.0 1.06% Talisman Energy Inc. Resources Q1 $325.0 0.98% Congress Financial Capital Company Financial & Real Estate Q1 $300.0 0.91% EPCOR Utilities Inc. Utilities Q1 $300.0 0.91% Aeroports de Montreal Services Q2 $300.0 0.91% Capital Desjardins Inc. Other Q2 $300.0 0.91% John Deere Credit Inc. Financial & Real Estate Q2 $300.0 0.91% Associates Capital Corporation of Canada Financial & Real Estate Q3 $300.0 0.91% GE Capital Canada Funding Company Financial & Real Estate Q3 $300.0 0.91% Hydro One Inc. Utilities Q3 $300.0 0.91% Associates Capital Corporation of Canada Financial & Real Estate Q4 $300.0 0.91% BCE Inc. Other Q4 $300.0 0.91% EnCana Corporation Resources Q4 $300.0 0.91% Bank of Nova Scotia Financial & Real Estate Q4 $300.0 0.91% Total $16,372.4 49.5% 2002 in Review 6

Corporate Bond Issuance (2002) Sector Breakdown Other 16% Manufacturing High Tech 0.01% Financial & Real Estate 54% Manufacturing Other 0.8% Services % Resources 8% Utilities 12% ly Comparison of Corporate Bond Issuance by Sector Manufacturing High Tech Manufacturing Other Services Resources Q4/01 $323.9 4 $190.0 2 $1,655.6 8 $785.0 4 Q1/02 $2.5 1 $90.0 1 $1,159.6 4 $928.8 7 Q2/02 $0.0 0 $60.0 1 $1,304.4 7 $525.0 2 Q3/02 $0.0 0 $0.0 0 $114.5 2 $250.0 2 Q4/02 $0.0 0 $.0 1 $601.2 5 $888.2 9 Utilities Financial & Real Estate Other Q4/01 $1,162.5 7 $4,478.8 36 $2,221.6 12 Q1/02 $1,520.0 6 $3,151.1 32 $1,263.1 9 Q2/02 $89.6 1 $5,044.7 35 $1,138.0 6 Q3/02 $1,030.0 7 $4,.3 27 $292.2 6 Q4/02 $1,275.0 7 $5,476.5 37 $2,703.1 14 Notes: 1. Highest sector issuance value bolded for each quarter 2. Services sector includes: High Tech Services and Other Services 3. Resources sector includes: Forestry, Mining and Oil & Gas 2002 in Review 7

Money Market: Trading Trading in money market instruments was down by 4% from $4.9 billion in 2001 to $4.7 billion in 2002. Tbill trading was up by % from $1.01 trillion in 2001 to $1.11 trillion in 2002. Trading of Bankers Acceptances was down by 4% from $1.42 trillion in 2001 to $1.36 trillion in 2002. Commercial paper trading was down by % from $2.46 trillion in 2001 to $2.21 trillion in 2002. ly Comparison of Canadian Money Market Trading Corporate and Finance Company (Commercial) Paper Government of Canada TBills Bankers' Acceptances (BA s) over over over over over over Q4/01 $252.5 11% 5% $361.8 8% 8% $602.1 0.1% 7% Q1/02 $254.5 1% 2% $378.6 5% 4% $595.3 1% 9% Q2/02 $264.5 4% 3% $367.3 3% 3% $543.5 9% % Q3/02 $296.4 12% 30% $306.0 17% 8% $526.7 3% 12% Q4/02 $296.1 0.1% 17% $311.5 2% 14% $549.3 4% 9% Note: Trading data excludes repos 1,200 Money Market Trading (ly Totals) 800 TBill Trading 1, 1,000 900 800 700 600 500 400 300 200 700 600 500 400 300 200 BA's & Commercial Paper Trading Government of Canada TBills Bankers' Acceptances Commercial Paper 2002 in Review 8

INVESTMENT DEALERS ASSOCIATION OF CANADA www.ida.ca CALGARY Suite 2300 355 Fourth Ave. S.W. Calgary, Alberta T2P 0J1 Tel.: (403) 2626393 Fax: (403) 2654603 HALIFAX TD Centre, Suite 1620 1791 Barrington St. Halifax, Nova Scotia B3J 3K9 Tel.: (902) 4238800 Fax: (902) 4230629 MONTRÉAL Bureau 2802 1 Place Ville Marie Montréal, Québec H3B 4R4 Tel.: (514) 8782854 Fax: (514) 8783860 TORONTO Suite 1600 121 King St. W. Toronto, Ontario M5H 3T9 Tel.: (416) 3646133 Fax: (416) 3640753 VANCOUVER Suite 1325 P.O. Box 11614 650 West Georgia St. Vancouver, BC V6B 4N9 Tel.: (604) 6836222 Fax: (604) 6833491 Lise HubbardMuir, Research Analyst Capital Markets Department lhubbardmuir@ida.ca Ce rapport est aussi disponible en français sur demande. The Investment Dealers Association of Canada is the national selfregulatory organization and representative of the securities industry. The Association's mission is to protect investors and enhance the efficiency and competitiveness of the Canadian capital markets.