Tuesday, March 27, 2012

Markets treat Ontario bonds as riskier - The Globe and Mail

The Globe and Mail has an article on the relatively rising cost of debt to the Ontario government.

Markets treat Ontario bonds as riskier - The Globe and Mail:
"A decade ago, Ontario five-year bonds actually yielded less than five-year Government of Canada bonds, according to data from Bloomberg.
Even as recently as five years ago, investors demanded a yield premium of just 14 basis points (or 14 hundredths of a percentage point) to choose Ontario five-year bonds over federal government bonds.
By this time last year, the premium investors wanted to buy Ontario five-year bonds was 34 basis points. Now, the premium is 56 basis points. That means the gap has widened a further 22 basis points in the past 12 months after increasing by only 20 basis points in total over the preceding four years.
The trend is similar in 10-year bonds. In 2007, the premium was 27 basis points over Canada’s. Last year, it was 80 basis points. Now, it’s 100 basis points, having jumped another 20 basis points in the last year."
Read the entire article at The Globe and Mail Site

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