October 6, 2008 / 8:24 PM / in 9 years

Ottawa delays sales of new Canada Savings Bonds

TORONTO (Reuters) - Sales of new Canada Savings Bonds were due to begin on Monday, but the sales campaign has been postponed, the federal Finance Department said.

No reason was given.

“There are no bonds on sale at this time,” stated a notice on the government website for Canada Savings Bonds, products aimed at individual Canadian investors since 1946.

“The new sales date, interest rates, and bond series will be announced shortly. Rates for outstanding issues of bonds will be announced at the same time.”

A Finance Department spokesman said he had no further details.

CSBs are fully backed by the government of Canada and are cashable at any time. A similar alternative, the Canada Premium Bond, pays a higher rate but can only be redeemed for cash once a year.

Close to one million Canadians buy the bonds annually through payroll deductions, the government website says.

Various series of 10-year CSBs are paying interest rates of between 2.45 percent and 3.10 percent in 2008, with rates for future years not yet announced.

Various series of CPBs pay between 2.75 percent and 3.40 percent this year, with some series set to pay between 2.90 percent and 3.50 percent in 2009.

Savings bonds do not trade in a secondary market.

But in the domestic fixed-income market, drastic declines in world stock markets have caused government of Canada bonds to rally in recent weeks, pushing down their yields. The benchmark 10-year government of Canada bond was yielding 3.44 percent on Monday afternoon.

($1=$1.10 Canadian)

Reporting by Lynne Olver; Editing by Peter Galloway

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