By Gary Hirst
This past week, Canada revealed that they were considering tapping into the bond market again—the ultra-long bond market. And, interestingly enough, this would be the third time this year that the nation would be considering an ultra-long bond sale.
The nation said, this past Wednesday, that they were considering entering the ultra-long debt market for the third time this year. They presumably re-enter the market through the reopening of their December 2064 bond, since they wish to take advantage of lower interest rates.
Canada entered the ultra-long bond market earlier this year. The nation first started their foray in April, and then made a return in July. Both trips into the market helped the nation raise 2.5 billion in Canadian dollars ($2.2 billion). The first outing in April raised the first 1.5 billion CAD, while the second outing in July raised the last 1 billion CAD.
But, even as the nation raises money, they’re still pondering ways to lower borrowing costs over all. The nation’s federal finance department revealed the nation’s intentions to do so in a recent statement. The Canadian Department of Finance didn’t, however, mention how much [Canada] plans to raise, should they continue to offer up ultra-long bonds.
They did mentioned that the ‘market reentry would be a reopening of their already existing 2.75 Government of Canada bond, which is scheduled to mature in December 2064.’
On an interesting note, ultra-long bonds are typically avoided by national governments for several reasons. Although these debts often extend past 30 years, they carry higher interest rates than the usual security.
But, in a time where interest rates are lower, they’re looking decidedly more attractive to governments around the world. The United Kingdom, Japan and France are among several nations who have sold ultra-long bonds in recent times.
Should Canada decide to enter the market for a third time, it would mark the nation’s third time seeking ways to lower interest costs amid the uncertain economic condition across the globe.