Ottawa should issue more real-return bonds (RRBs) to satisfy investor demand and lower its borrowing costs, among other benefits, according to a report released today by the C.D. Howe Institute. In “More RRBs Please! Why Ottawa Should Issue More Inflation-Indexed Bonds,” Philippe Bergevin and William B.P. Robson argue that Canada’s federal government, which began issuing RRBs in 1991, should issue more RRBs, of more types, than currently planned. “For individual savers and financial intermediaries such as pension funds, these bonds offer uniquely valuable protection against inflation. And for Ottawa, issuing more RRBs could lower debt-service costs – not just because of their typically lower yield, but also because more RRBs would underline the government’s commitment to low inflation,” said Mr. Robson, President and CEO of the Institute.
