Canadian Government Sells 50-year Bonds

The Canadian government has successfully sold C$1.5bn in 50-year Government of Canada bonds, marking a first as the previous longest-term bond was for 30 years.

Joe Oliver, the finance minister said the government acted to take advantage of a strong bond market and low interest rates in order to lock in long-term funding.

“This inaugural ultra-long issue is the first of its kind for the Government and is in line with its commitment since 2012–13 to reallocate short-term bond issuance towards long-term bonds to help reduce refinancing risk,” a statement issued by the Department of Finance read.

The debt, which will mature December 1, 2064, carries an interest rate of 2.96%. The government’s previous longest-term bond, of 30 years, was at a rate of 2.94%.

“In the current environment, it is both advantageous and prudent for our government to lock in additional long-term funding,” Oliver added. “This 50-year bond will help us meet our goal of raising stable and low-cost funding to meet Canada’s financial needs and best serve taxpayers.”

Bank of Montreal chief economist Doug Porter says insurance companies and pension funds would be the natural customers for the long-term treasury bills.

Canada is the only country of the G7 group of major global economies that has retained a AAA credit rating from all three of the major credit rating agencies.

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