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The impact of ceasing issuance of real return bonds

Find out what you need to know about the recent real return bond announcement by the Ministry of Finance.

Michael Cook, CFA Feb. 01, 2023 13-minute read

On Thursday, November 3, 2022, the Ministry of Finance (MoF) announced they were ceasing the issuance of Real Return Bonds (RRBs) in Canada. The Federal Government had been issuin RRBs regularly since 1991 and has been the largest source of inflation-protected securities for the last 30 years.

Key takeaways about this annoucement:

The Federal Government has ceased issuing RRBs effective immediately.
Don’t expect other domestic issuers to fill the gap left by the Federal Government.
Tactical investors in RRBs will likely exit the asset class due to even less liquidity.
Strategic investors (pension plans, insurance companies) will likely hold onto the bonds they already own.
Investors will still be able to hedge inflation, but will likely have to accept more basis risk.

Read the full report (PDF, 750 KB) Opens in a new window.

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Written by

Michael Cook, CFA
Vice-President and LDI Client Portfolio Manager, Institutional Client Relations

The impact of ceasing issuance of real return bonds

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