{"id":22680,"date":"2022-06-10T18:40:38","date_gmt":"2022-06-10T18:40:38","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2022\/06\/10\/ottawa-cancels-ultra-long-bond-sale-as-fiscal-balance-sheet-improves\/"},"modified":"2022-06-10T18:40:38","modified_gmt":"2022-06-10T18:40:38","slug":"ottawa-cancels-ultra-long-bond-sale-as-fiscal-balance-sheet-improves","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2022\/06\/10\/ottawa-cancels-ultra-long-bond-sale-as-fiscal-balance-sheet-improves\/","title":{"rendered":"Ottawa cancels ultra-long bond sale as fiscal balance sheet improves"},"content":{"rendered":"<div style=\"text-align:center\"><\/div><p> \n<\/p>\n<div id=\"\">\n<nav aria-label=\"Breadcrumb\" class=\"breadcrumbs\">\n<h2 class=\"visually-hidden\">Breadcrumb Trail Links<\/h2>\n<ol class=\"breadcrumbs__items list-unstyled\">\n<li class=\"breadcrumbs__item\"> News <\/li>\n<li class=\"breadcrumbs__item\"> FP Finance <\/li>\n<li class=\"breadcrumbs__item\"> FP Economy <\/li>\n<\/ol>\n<\/nav>\n<p class=\"article-subtitle\"> &#8216;They don\u2019t need to issue this because the fiscal accounts are improving rapidly&#8217; <\/p>\n<figure class=\"featured-image\"><picture class=\"featured-image__ratio\"><\/picture><figcaption class=\"featured-image__caption image-caption\"><span class=\"caption\">The Bank of Canada in Ottawa.<\/span> <span class=\"credit\">Photo by Justin Tang\/Bloomberg files<\/span> <\/figcaption><\/figure>\n<\/div>\n<div id=\"\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>The Government of Canada has cancelled its ultra-long bond issue as it believes its borrowing needs are declining while its<span style=\"font-family: -apple-system, BlinkMacSystemFont, 'Segoe UI', Roboto, Oxygen-Sans, Ubuntu, Cantarell, 'Helvetica Neue', sans-serif\"> balance sheet improves on rallying commodities and higher inflation.<\/span><\/p>\n<\/p><\/div>\n<div id=\"\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p data-async=\"\">The government on Thursday\u00a0said the bond, which was issued in 2014 as a 50-year note set to mature Dec. 1, 2064, would have its announced auction on June 16 cancelled, catching some fixed-income analysts by surprise.<\/p>\n<p>Andy Nasr, chief investment officer at Scotia Wealth Management, said consultations late last year to gauge demand for the product showed there were some concerns surrounding available liquidity. Faced with economic uncertainty over the next few quarters, he said\u00a0the wait-and-see approach in suspending the bond now and potentially bringing it back later if warranted makes sense to him.<\/p>\n<p>\u201cGiven that fiscal balances had improved and that we\u2019ve got a lot more uncertainty about where short- versus long-term rates are going to go, it probably was just a prudent decision to hold off a little bit and then wait to see where everything rests,\u201d he said.<\/p>\n<\/p><\/div>\n<div id=\"\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>\u201cBecause interest rates were zero or near zero, there was this view that they were well below what reasonable long-term inflation expectations were or the output potential of the economy was, so it made sense to kind of lock in that financing for a very long period of time,\u201d Nasr said.<\/p>\n<p>He added the economy is now in a different inflation regime and central banks are hiking rates, raising more uncertainty about what the normalized costs of capital affecting asset prices are.<\/p>\n<p>\u201cThat\u2019s what I think is spilling over into financial markets: all those concerns and worries, and that also affects how people perceive how they want to position their fixed-income portfolios and the institutional demand and everything else,\u201d Nasr said.<\/p>\n<p>Michael Heydt, senior vice-president, Global Sovereign Ratings, at DBRS Morningstar, said the ultra-long bonds the government is suspending represent a fairly small amount of the total bond market.<\/p>\n<p>\u201cThey don\u2019t need to issue this because the fiscal accounts are improving rapidly,\u201d he said. \u201cMy takeaway is that it wasn\u2019t a reflection of what\u2019s going on in the bond market per se, but more a reflection on the lack of need (for funding).\u201d<\/p>\n<p data-async=\"\"><em>\u2022 Email: shughes@postmedia.com | Twitter: <a class=\"twitter-follow-button\" data-evt=\"click\" data-evt-typ=\"click\" data-evt-val=\"{\" control_fields=\"\" link=\"\" href=\"https:\/\/twitter.com\/StephHughes95\" rel=\"noopener noreferrer nofollow\" target=\"_blank\">StephHughes95<\/a><\/em><\/p>\n<p> <iframe loading=\"lazy\" frameborder=\"0\" height=\"1200\" id=\"\" src=\"https:\/\/modules.wearehearken.com\/financial-post\/embed\/9353\/share\" style=\"--height: 1200px; \" width=\"\"><\/iframe> <\/p>\n<\/p><\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/>\n<br \/>Ottawa cancels ultra-long bond sale as fiscal balance sheet improves<\/a><br \/>\n<br \/>2022-06-10 18:40:38<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Breadcrumb Trail Links News FP Finance FP Economy &#8216;They don\u2019t need to issue this because the fiscal accounts are improving rapidly&#8217; The Bank of Canada in Ottawa. Photo by Justin&#8230;<\/p>\n","protected":false},"author":2,"featured_media":22681,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/06\/no0610boc.jpg?quality=90&strip=all&w=288&h=216","fifu_image_alt":"","footnotes":""},"categories":[31],"tags":[],"class_list":["post-22680","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy"],"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/22680","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=22680"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/22680\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/22681"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=22680"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=22680"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=22680"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}