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Govt of Canada Ukraine Sovereignty Bond
November 18, 2022
9:59 am
canadian.100
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The Govt of Canada has announced a new issue of Canada guaranteed bonds to support Ukraine. The bonds will be for a period of 5 years, annual rate 3.3% interest payable semi-annually. The minimum purchase is $100. I expect most banks will sell them as well as brokerages - iTrade already has this listed as a New Issue.

Although this is a pet project of PM Trudeau, it will be interesting to see the pickup by Canadians who are supposedly suffering from high inflation and living costs.

https://www.canada.ca/en/department-finance/programs/financial-sector-policy/ukraine-sovereignty-bond.html

November 18, 2022
10:15 am
AltaRed
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There is no indication in the link that the bonds will be available anywhere other than through brokerages (full service and/or DIY discount). The rate may only be attractive to those who would otherwise buy GoC 5 year bonds.... or have a predisposition to want to be helping Ukraine.

November 18, 2022
1:23 pm
Bruford
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Another tax grab boondoggle in the name of Ukraine. When (not if) Ukraine eventually defaults on the bonds, the Canadian taxpayers are on the hook to pay the principle and interest due.

November 18, 2022
2:13 pm
AltaRed
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I imagine so if Ukaine defaults on paying it back (most likely). Not really all that different than direct aid at the government level as has been done by a number of NATO countries. It is important for Canada to do its part to resist aggression and occupation. This bond issue is a way for Canadians to be directly engaged in that effort

November 18, 2022
3:27 pm
MattS
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The government should take up a collection of willing contributors taxpayers and then they could match at 50% or something… when our finances at all levels are in shambles and deeply in the red they should not willingly give “free money” away. We take in Ukrainian refugees , that’s doing our part, and we do not take care of all Canadians as it is. When we have had floods etc very rarely did we see humanitarian aid coming from the rest of the world

November 19, 2022
5:32 am
Bruford
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AltaRed said
I imagine so if Ukaine defaults on paying it back (most likely). Not really all that different than direct aid at the government level as has been done by a number of NATO countries. It is important for Canada to do its part to resist aggression and occupation. This bond issue is a way for Canadians to be directly engaged in that effort  

Then lets call a spade a spade. Direct Ukraine aid from the Canadian Government rather than Ukraine Bonds from individuals. Trudeau just wants to hide his nefarious activities behind virtue signaling at our expense.

Yes Canadians should do their parts to resist the causes of aggression, namely provocation of others, like the Wests provocation of anyone who disagrees/resists their hegemonic activities.

November 19, 2022
5:50 am
savemoresaveoften
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this is effectively our govt borrowing to support Ukraine, no different than they directly handing cash aids over anyway. They can either issue 5y to fund the deficit, or issue a new bond with Ukraine's name on it . The money has to come from somewhere, and may get empathy investor when see 'Ukraine.'

But yeah always make me wonder how about local Canadians that also needs help...

November 19, 2022
7:38 am
AltaRed
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I rarely support generously supporting International causes when more help could be directed to domestic hardship cases but we do not live in a bubble on this planet and we do have about the 10th(?) largest national economy in the world. If we want to have some impact on how the world behaves (for the better), we have to step up to the plate from time to time for the broader good.

Helping a country defend itself from a monstrous aggressor and demon which will stop at virtually nothing to get its way (eerily similar to Hitler's grab of lands pre-WWII), seems like the right thing to do. We've seen this movie and know appeasement is not the answer. I am thus personally fine with Canada backstopping these bonds.

November 19, 2022
7:54 am
Norman1
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The $500 million of Ukraine Sovereignty bonds are not issued by the Ukraine government.

They are Government of Canada five year bonds that will mature August 24, 2027, Ukrainian Independence Day. As usual, the bonds will pay interest twice a year.

If not enough individual Canadians buy them, then the usual bond buyers, like pension funds, will pick them up. The Ukraine label on that series of Government of Canada bonds is not material to bonds as a fixed income security.

The $500 million or $0.5 billion is not significant for the Government of Canada that has an annual budget of around $330 billion. It is like $75 to a household with an annual budget of $50,000.

Government of Canada is not going make the bonds available through bank and credit union branches likely because the government doesn't want a repeat of the costly Canada Savings Bonds program.

One will need a brokerage account to buy them.

That way, the government can just deliver one uber certificate to the Canadian Depository for Securities for the bonds, like it does for its other series of bonds, and the bonds get allocated in the CDS book.

November 19, 2022
8:22 am
Bruford
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AltaRed said
I rarely support generously supporting International causes when more help could be directed to domestic hardship cases but we do not live in a bubble on this planet and we do have about the 10th(?) largest national economy in the world. If we want to have some impact on how the world behaves (for the better), we have to step up to the plate from time to time for the broader good.

Helping a country defend itself from a monstrous aggressor and demon which will stop at virtually nothing to get its way (eerily similar to Hitler's grab of lands pre-WWII), seems like the right thing to do. We've seen this movie and know appeasement is not the answer. I am thus personally fine with Canada backstopping these bonds.  

Diversify your sources, your dependence on CBC is showing.

November 19, 2022
8:27 am
canadian.100
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Norman1 said

The $500 million or $0.5 billion is not significant for the Government of Canada that has an annual budget of around $330 billion. It is like $75 to a household with an annual budget of $50,000.

Sure what's a billion $ to our Govt - just peanuts.
Glad to hear that the Pension Funds will buy them if the uptake is low.

November 19, 2022
9:26 am
Alexandre
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Bruford said

Diversify your sources, your dependence on CBC is showing.  

How about Russian TV and media as sources? "Kill Ukrainian children who dare to show finger to Russian army," "Nuke Ukrainian cities," "Wipe out Ukrainian cities block after block at the first sign of resistance," "Let them (Ukrainian civilians) freeze to death without heat and electricity if they don't want to submit to Russia."

November 19, 2022
9:48 am
AltaRed
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Bruford said

Diversify your sources, your dependence on CBC is showing.  

I have no idea where that curve ball came from but CBC has nothing to do with this, nor do I watch CBC. I actually actively supportive of de-funding the CBC. I'll file that useless comment in the 'garbage can' folder.

The $0.5B is going to be funneled by the GoC through the IMF's Administered Account for Ukraine anyway. This bond is simply a way for Canadians to be directly involved in providing financial support than indirectly through General Revenue (income taxes, GoC bond issues and the like).

People are making far too much of a mountain out of this molehill. It is gimmicky but if you don't like it, don't participate. I won't be since the rate is not acceptable anyway (nor are GoC bond yields).

November 19, 2022
10:12 am
savemoresaveoften
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AltaRed said

People are making far too much of a mountain out of this molehill. It is gimmicky but if you don't like it, don't participate. I won't be since the rate is not acceptable anyway (nor are GoC bond yields).  

This sums it up well

November 19, 2022
10:23 am
Bruford
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"Helping a country defend itself from a monstrous aggressor and demon which will stop at virtually nothing to get its way"

That is where your obvious bias is on display.

" It is gimmicky but if you don't like it, don't participate"

Unfortunately Canadians are not able to opt out of tax payments, so we have no choice but to participate.

November 19, 2022
10:33 am
Doug
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AltaRed said
There is no indication in the link that the bonds will be available anywhere other than through brokerages (full service and/or DIY discount). The rate may only be attractive to those who would otherwise buy GoC 5 year bonds.... or have a predisposition to want to be helping Ukraine.  

Agreed. This is just a special type of Government of Canada bond sold through wholesale channels, but targeted at retail investors. The participating financial institutions list are all broker dealer firms (i.e., IIROC members).

I very much doubt the Government of Canada wants to reinstate the money-losing retail debt program. They peddled their offerings through financial institution branches until about 10 years ago, and in the 10 years before the sales were discontinued, I believe the take up was exceedingly low. If more than a handful of customers of a single bank branch purchased a GoC bond, I'd be very surprised. sf-cool

Cheers,
Doug

November 19, 2022
10:36 am
Doug
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MattS said
The government should take up a collection of willing contributors taxpayers and then they could match at 50% or something… when our finances at all levels are in shambles and deeply in the red they should not willingly give “free money” away. We take in Ukrainian refugees , that’s doing our part, and we do not take care of all Canadians as it is. When we have had floods etc very rarely did we see humanitarian aid coming from the rest of the world  

I agree with this. A perpetual Government of Canada-matching contribution program to participating international charitable organizations would be a much better way to go. I'd be much happier donating to, say, UNHCR Canada with a GoC match than to directly helping to fund and perpetuate armed military conflict.

Cheers,
Doug

November 19, 2022
10:38 am
Doug
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canadian.100 said

Norman1 said

The $500 million or $0.5 billion is not significant for the Government of Canada that has an annual budget of around $330 billion. It is like $75 to a household with an annual budget of $50,000.

Sure what's a billion $ to our Govt - just peanuts.
Glad to hear that the Pension Funds will buy them if the uptake is low.  

Including the Canada Pension Plan Investment Board, too, of course. 🙂

Cheers,
Doug

November 19, 2022
10:53 am
mordko
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Bruford said
Another tax grab boondoggle in the name of Ukraine. When (not if) Ukraine eventually defaults on the bonds, the Canadian taxpayers are on the hook to pay the principle and interest due.  

1. Ukraine can’t default on bonds which Ukraine didn’t issue.
2. Canadian government is helping Ukraine to defend against a fascist aggressor. That’s not a secret.
3. Yes, Canadian taxpayers are funding it. The majority support helping Ukraine to defend. That’s how democracy works.

November 19, 2022
10:58 am
mordko
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Bruford said
"Helping a country defend itself from a monstrous aggressor and demon which will stop at virtually nothing to get its way"

That is where your obvious bias is on display.

" It is gimmicky but if you don't like it, don't participate"

Unfortunately Canadians are not able to opt out of tax payments, so we have no choice but to participate.  

Its OK to be biased in favour of people defending against enslavement.

Incidentally, Canada has a common border with Russia. Russia has showed a keen interest in Canadian Arctic. Stopping serial aggressor before we are invaded is a bonus of helping Ukraine to defend itself.

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