Provicial Bonds

Provincial bonds are issued by the provinces and provincial government agencies. They form the second largest issuer of bonds in Canada, accounting for about 20% of the bond market. The funds raised by provincial government issues are used to fund deficits that arise from public works and other expenditures. Because such projects are long term, the bonds also tend to have longer terms to maturity.

Just as with Government of Canada bonds, the principal and interest of provincial bonds are guaranteed to be paid when held to maturity. The bonds are also highly liquid and can be easily bought and sold. Terms are available up to 30 years, and bonds are available in face value increments of $1,000.

The credit quality of provincial bonds varies according to the province issuing the bond, because some provinces have higher ratings than others.† Provincial bonds are one of the most secure investments available and therefore are considered lower risk type investments.† Bond yields on provincial bonds will typically be slightly higher than bond yields on Government of Canada bonds.†

Provincial bonds issued are most commonly available with a coupon, however in some cases they are available as strip bonds.† Provincial bonds are available for purchase from most investment dealers.†

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