The Canadian government announced on Thursday that it is considering issuing ultra-long bonds, arguing that debt instruments of these terms help lock in low funding costs and reduce refinancing risks.

Ultra-long bonds are usually defined as those featuring terms of 50 years or longer.

The government says that if it proceeded, it would be via a reopening of the market for the 2.75% Dec. 1, 2064 ultra-long bond, which the Bank of Canada issued in 2014, using a modified auction approach. Any move would be subject to favourable market conditions, the government says.

Read: Canada issues more ultra-long bonds

The government highlighted the potential for issuing ultra-long bonds, and the option of doing so via auction, in the Debt Management Strategy for 2017–18 published in Annex 2 of the 2017 federal budget document.

The government indicated that any ultra-long bond issuance would be subject to certain criteria, including projections of potential cost savings, and indications of sufficient demand.

“Ultra-long bond issuance remains a tactical funding measure and is not part of the regular bond program,” the government indicated. “There is no commitment to issue ultra-long bonds and other factors may preclude the government from issuing these securities, even if the above [issuance] criteria are met.”

In July, the Bank of Canada raised its benchmark overnight interest rate by 25 basis points to 0.75%, the first increase in rates announced by the Bank in seven years. In June, the U.S. Federal Reserve raised rate 25 basis points to 1.25%, representing its second rate hike for the year.

Read: Ultra-long bonds still popular

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