TORONTO (Reuters) - Big bond investors are laying bets that Canadian corporate debt will offer superior returns as the Bank of Canada abandons record-low interest rates and kicks off the first tightening cycle of the decade.

An improving economy, the main reason for the likely rate hike, is why many fixed-income fund managers see corporate debt outperforming lower-yielding Canadian government bonds. But they also highlight healthy corporate balance sheets and attractive investment opportunities in bonds.

"It's not a bad thing that the Bank of Canada is going to raise interest rates... this is in response to a very strong economy," said William John, a bond fund manager with Phillips Hager & North, a unit of Royal Bank of Canada.

"It shouldn't be something that should scare people away from good quality investments ... That doesn't make corporate debt less attractive," added Vancouver-based John.

A Reuters poll released on Thursday showed 32 of 40 global forecasters expect the Bank of Canada to raise rates by 25 basis points on June 1, making it the first G7 central bank to start nudging crisis-level rates higher.

A rise would bring the overnight rate to 0.5 percent, still low by historical standards.

The price of many bonds, particularly shorter-term issues, tends to fall when interest rates rise, as coupons become less attractive compared with rising yields elsewhere. But the impact varies, depending on the type of security.