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[Canada] Where to park ~$10 million for an undetermined length of time?


Otsog

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Hi all,

 

The organization I work with recently received ~$10 million.  A portion of the funds may have to be returned depending on the outcome of a court case.  The timeline of the resolution of the case is not known, but could be anywhere from months to 2+ years. 

 

I'm looking for advice on our investment options or any other issues I should take into account.  I'm assuming based on the amount, CDIC limits mean our best option would be AAA Government Bonds?

 

TIA,

 

OTSOG

 

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Followup, if we decide to go with AAA Canada bonds like the below, how many different bonds should the $10 million be spread over?

 

http://i.imgur.com/nViOv0Q.png

 

Why not laddered short term canadian bonds spread between now and 2 years?

 

BeerBaron

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If you could get better GIC rates from big 5 better than Gov't Canada bonds you may as well go for it in excess of CDIC limits. Believe me, if one of the big 5 goes tits up you'll have much bigger problems than a haircut on your 10 mil.

 

The problem is whether you can get the GICs. They're basically a retail product and don't take in 10 mil deposits.

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Why not laddered short term canadian bonds spread between now and 2 years?

 

BeerBaron

 

By laddered do you mean just buying a bit of all the ones posted, or is that a different product?

 

If you could get better GIC rates from big 5 better than Gov't Canada bonds you may as well go for it in excess of CDIC limits. Believe me, if one of the big 5 goes tits up you'll have much bigger problems than a haircut on your 10 mil.

 

The problem is whether you can get the GICs. They're basically a retail product and don't take in 10 mil deposits.

 

Ya, I looked at the posted GIC rates at a couple of bank sites, they are pretty awful from what I found.  I think your right re: CDIC not being a major concern.

 

Safe to assume that your company doesn't have a line of credit that it could pay down? Or are you forced to segregate the funds?

 

Less than $2 mill LTD at 2.7%.  The plan is to segregate the funds as any repayable amount will have to be repaid with actual interest earned.

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Why not laddered short term canadian bonds spread between now and 2 years?

 

BeerBaron

 

By laddered do you mean just buying a bit of all the ones posted, or is that a different product?

 

 

Yeah, I mean something like 800k in 60 days duration, 800K in 120 days duration, etc.. as your 1st bond expire you roll it over to 2 years.

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