In Canada, there is expected to be a significant increase in Indigenous-related project financing, according to a report released by the international credit rating agency Morningstar DBRS. The report notes that Indigenous communities in Canada are increasingly interested in acquiring equity positions in major projects and infrastructure to generate revenue and economic opportunities for their people. However, a major barrier to Indigenous partners pursuing equity ownership has been a lack of access to capital, as the Indian Act prohibits First Nations from using their land as collateral, making it difficult to access competitive interest rates through mainstream capital markets.
To address this issue, the federal and provincial governments in Canada are starting to provide Indigenous communities and organizations with access to capital to support economic development. Morningstar’s report identifies over $13 billion in available federal and provincial programs, such as loan guarantees, which have led to increased financing activities by Indigenous communities and groups. The report estimates that Indigenous financing activity, including government loan guarantees, has reached almost $800 million annually over the past five years. Additionally, there are several high-profile transactions on the horizon involving Indigenous communities, such as Ottawa’s planned sale of the Trans Mountain pipeline to Indigenous groups and TC Energy Corp.’s planned sale of its NGTL pipeline system to an Indigenous consortium.
Morningstar believes that there is significant potential for growth in Indigenous-related financings in the coming years, with Indigenous participation in capital markets being beneficial for all parties involved. The agency anticipates that Indigenous-related capital markets activity will continue to increase significantly, supported by increased government guarantees and other forms of support. The development of the Cedar LNG project by the Haisla Nation and Pembina Pipeline Corp is an example of the type of projects that could help drive this growth. Overall, the report highlights the growing interest from Indigenous communities and organizations in participating in equity ownership and project financing as a means to generate economic opportunities for their people.
The increasing government support for Indigenous communities to access capital for economic development signals a shift towards greater financial inclusion and opportunities for Indigenous groups in Canada. By providing access to capital through loan guarantees and other programs, the government is helping to address longstanding barriers to Indigenous communities’ participation in the economy. This support has led to a rise in Indigenous financing activities in recent years and is expected to continue growing in the future. The report emphasizes the mutually beneficial nature of Indigenous participation in capital markets, highlighting the potential for Indigenous communities to benefit economically from equity ownership in major projects and infrastructure.
Overall, Morningstar DBRS’ report highlights the growing momentum in Indigenous-related project financing in Canada, with increasing government support and interest from Indigenous communities driving this trend. The report identifies a significant amount of available government programs and resources that are facilitating increased financing activities by Indigenous communities and organizations. With projects such as the Trans Mountain pipeline sale and the development of the Cedar LNG project on the horizon, there is significant potential for growth in Indigenous-related financings in the near future. This shift towards greater financial inclusion for Indigenous communities is seen as a positive development that can create economic opportunities and generate revenue for Indigenous people in Canada.
