MNI: Canada Bond Issuance To Decline to C$115B in FY2018-2019

By Yali N'Diaye

     OTTAWA (MNI) - Canada finance ministry announced Tuesday that its gross

bond issuance will decline to C$115 billion in FY2018-2019 from C$138 billion

the previous fiscal year, consistent with lower deficits and debt-to-GDP ratios.

     The decline in bond issuance will be accompanied by a shift in the program

composition, as the share of 2-year, 3-year, and 5-year notes will decrease to

allow a larger share of bills.

     The finance ministry presented its 2018 Budget Tuesday, revising down the

deficit estimate to C$18.1 billion from C$18.6 billion for FY2018-2019. 

     --MORE BILLS

     In its budget report, the Department of Finance said market participants

asked for an increase in the stock of treasury bills, which declined in response

to lower financial requirements stemming from increased tax revenues due to

stronger-than-expected economic activity in 2017-2018.

     Looking at the composition of the stock of market debt, Treasury bills will

rise to C$138 billion in FY2018-2019 from C$125 billion in FY2017-2018.

     Bi-weekly issuance of 3-, 6-, and 12-month bills will continue, with

auction sizes ranging from C$8 billion to C$14 billion, the same as the previous

year.

     Cash management bills will also continue to be used.

     --LESS BOND ISSUANCE

     At the longer end of the curve, gross bond issuance will decline to C$115

billion, with the share of 2-, 3-, and 5-year notes declining.

     As a result, the size of the bond target range for 2-year note auctions is

being reduced to C$10-16 billion from C$12-20 billion. The number of auctions

remains unchanged at four.

     For 3-year notes, the auction size will be reduced to C$4-9 billion from

about C$8-12 billion. There will be two auctions instead of three.

     For 5-year notes, the size will be reduced to C$11-17 billion, still with

two scheduled auctions.

     The finance ministry will continue to issue ultra-long bonds on a tactical

basis.

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

[TOPICS: M$C$$$,M$$FI$]