UPDATE 1-Canada eyes 40-year-plus bonds to lock in low yields

Thu Mar 21, 2013 5:26pm EDT
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* Britain, Japan, France already issue 40 years or more

* U.S. looking at going beyond 30 years

* T-bill stock to fall as mortgage-backed securities mature

* Dealers note increasing foreign interest

By Randall Palmer

OTTAWA, March 21 (Reuters) - The Canadian government is considering imitating some its Group of Seven peers and most of its provinces in issuing bonds of 40 years or longer so it can lock in low interest rates, according to Thursday's federal budget.

The government also announced it would extend a temporary increase in the issue of 10- and 30-year bonds as it shifts out of short-term government debt.

"The government is assessing the potential benefit of issuing bonds with maturities of 40 years or longer," the budget document said.

Canadian officials noted the United Kingdom regularly issues 40- and 50-year bonds; Japan issues 40-year maturities and France 50 years. The longest maturity for other partners in the Group of Seven (G7) leading industrialized countries - the United States, Germany and Italy - is 30 years.   Continued...