MNI BRIEF: Investors Want More Canada 30Y Debt, Pan RRBs' End

Canada has lost some credibility with investors after cancelling real-return bond sales, and they want the program restored and 30-year auctions expanded, according to a consultation the Bank of Canada released late on Thursday.

"Several market participants pointed out that Canada’s transparency and consistency as an issuer has been somewhat lower over the past year, noting the unexpected cancellation of the Real Return Bond (RRB) program in particular," according to the summary of comments. "While acknowledging that a resuscitated RRB program is very unlikely, many participants expressed that it would be welcome."

An internal review found little reason to revisit the ending of RRB sales, first made available in 1991, though officials said the shift wasn't well implemented. (See: MNI: Canada Says Ending RRBs Justified, Decision Given Poorly) Some lawmakers questioned the move and other media commentary at the time noted halting inflation-protected bonds was curious at a time when consumer prices were soaring.

Canada also rattled some investors this year with a review of a mortgage bond program that mentioned its potential elimination before it was modified. A separate consultation Thursday reiterated most investors said the program was valuable and should be sustained.

Investors also called for expanded 30-year debt sales. "A universal response from participants was the current mismatch between very strong demand for 30Y bonds and limited supply," the report said. "Many respondents noted that even small trades in 30Y bonds can move markets somewhat and trying to trade larger positions can be challenging."