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Email this10:37 pm
October 21, 2013
Online
Available only to residents of Ontario until June 21 this year.
http://ontariosavingsbonds.ca/.....s2014.html
The fixed-rate ones cannot be redeemed before maturity (3yr or 10yr), which seems hard to swallow. The rates are not exciting, but it's good to know what's out there.
12:35 pm
October 21, 2013
Online
I actually wondered if anybody does buy them.
On the plus side, they're not adding too much to the provincial debt which we have to pay for!
9:56 pm
October 21, 2013
Online
I wonder how much of the debt is held by former forum member SD. He definitely had a point about those strip bonds!
I don't understand very much about how these things work but I'm beginning to wonder if the reason interest rates are not rising as fast as they said they would some time ago is because no government can afford them, as they all want to get re-elected!
Perhaps they won't go up in my lifetime, which may be shorter on account of negative after-tax after-inflation investment income to pay for things like health care - which most political leaders seem dedicated to cutting back on.
8:43 pm
January 15, 2014
Offline
A fixed rate 10 year bond of only 3.1% You can get Oaken Financial GIC 3.05% for 5 years and 1.35% for other bonds when you can get savings account with 1.9%. This is a horrible idea.
1:46 pm
October 21, 2013
Online
Even if we had another party in power, it wouldn't make any difference to the rates that Ontario offers. They reflect the prevailing rates. If Ontario were as desperate to borrow as has been suggested, they would have to offer better rates.
The 3-yr rate at 1.35, while horrible, is in the same range as at the Big Banks. TD, as an example, posts 1.4 today. http://www.tdcanadatrust.com/p.....CTable.jsp Scotia is shockingly worse at 1.25 - .
http://www.scotiabank.com/ca/en/0,,1115,00.html
Most people do deal with the Big Banks. In that context, these rates are within normal limits.
However, you won't catch me buying any of 'em!
4:38 pm
April 6, 2013
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The situation is not as bad as the list suggests. That list of Ontario bonds, with interest rates and maturity date, only gives part of the story.
Some of those Ontario bonds were issued decades ago. For example. one of the bonds in the list is the Province of Ontario, 8.100%, maturing 09/08/2023.
Yes, Ontario has been paying 8.1% on that bond. However, that bond is currently trading at 140.62% of face value, giving current buyers a yield to maturity of 3.00%. So, if Ontario were to borrow today until Septermber 2023, they would need to only pay 3% and not 8.1%.
The reason that Ontario has been paying 8.1% on those bonds is that those are 30-year bonds issued in September 8, 1993. See Ontario Financing Authority bond issues database. The bonds are Series HP, CUSIP 683234HM3.
Back then, interest rates were much higher. The CIBC prime rate in September 1993 was around 5.75%. Earlier in January 1993, the prime rate was 7.0%!
5:47 pm
August 5, 2014
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Brian, don't quit your day job if you think that interest rates and bond yields will be much higher in the next couple of years.
Also, 2023 is not a 30 year bond anymore. An Ontario 30 year bond matures in 2044. The longest Ontario bond I could find is 2045 and it is 3.56%.
Yields are down a lot since July. I remember something like 3.85% was around the rates at that time.
Either way, they are still low but are not 3.00% for 30 years.
8:03 pm
August 5, 2014
Offline
Brian, I guess you did not hear about the recent news about Joe Oliver Canada's finance minister launching a public consultation on their talking about possible bank bonds and bank equity, shares that a bail in policy is more possible then it used to be.
This was done on this long weekend. Basically, it is a taxpayers protection and bank recapitalization regime in case a financial downturn is deeper than they expect and they want investors from bank bond and financial institutions shareholders to take more of a loss.
I am not 100% sure of all the the information it contains but it sounds like more risk of possible future losses will be born by these types of investors.
Please write your comments in the forum.