October 7, 2008 / 9:28 PM / in 9 years

Flaherty says Canada Savings Bonds coming Wed

TORONTO (Reuters) - After a brief delay, Canada Savings Bonds should go on sale on Wednesday, Finance Minister Jim Flaherty said on Tuesday.

The bonds were supposed to be available for investors to buy on Monday, but sales were delayed as the Finance Department tried to determine appropriate rates, Flaherty said in a television interview on Tuesday, ahead of the October 14 general election.

“There’s been some fluctuation in market rates as you know recently, so we wanted to make sure that the rate set for Canada Savings Bonds would be a reasonable rate that would make them attractive,” Flaherty said.

“They should be on sale tomorrow.”

A notice on the government website for Canada Savings Bonds said this week that the campaign launch was postponed, but it gave no explanation or details.

Canada Savings Bonds, which have been sold to retail investors since 1946, are fully backed by the federal government and can be cashed in at any time. A similar product, Canada Premium Bonds, pay a higher rate but can only be redeemed for cash once a year.

The savings bonds do not trade in a secondary market.

Severe volatility in world stock markets had caused domestic bonds to rally in recent weeks, but Canadian bond prices eased on Tuesday. That pushed the yield on the benchmark 10-year bond up to 3.51 percent, versus 3.44 percent on Monday afternoon.

In the CBC television interview, Flaherty said that if re-elected, his party would take further measures to protect Canadian institutions from the credit crisis if needed.

“We shouldn’t confuse what’s going on in the stock market right now and the credit crunch, which has been with us for 14 months, which is a very serious challenge,” Flaherty said.

“If we have to take more steps to address that credit crisis issue to protect our institutions and our system in Canada, we will take those steps as a government,” Flaherty said.

“Having said that, the real economy in Canada is growing,” he added, citing Statistics Canada GDP data that showed the economy grew 0.7 percent in July, thanks primarily to a surge in crude oil and natural gas production.

($1=$1.10 Canadian)

Reporting by Lynne Olver; editing by Rob Wilson

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