Canada reopened its two year benchmark bond on Wednesday, raising C$6.0 billion as investors leaned into a short end issue that has benefited from easing inflation and rising bets on policy easing.
The bond, which matures on Nov. 1, 2027, cleared at an average yield of 2.495% with a bid-to-cover of 2.76 and a 0.17 basis point tail, according to results published by the Bank of Canada. The reopening carries a 2.50% coupon and lifted the outstanding size of the issue to C$18.0 billion.
The sale arrived as the federal government navigates one of its larger near term refinancing waves. The Bank of Canada’s auction calendar shows C$47.4 billion of Government of Canada bonds matured on Sept. 1, adding to immediate funding needs.
The two year tap slots into a September lineup that also includes longer dated reopenings later this month.
Primary dealers and end investors submitted C$16.8 billion in bids for the two year, with customers taking about 64% of the allotment and distributors the rest.
Canadian accounts received roughly 56% of the bonds and foreign buyers about 44%, a split that underscores continuing offshore appetite for high quality Canadian duration.
The auction metrics fit a pattern that has favored the front end of the curve in recent weeks. While secondary market yields have drifted lower as price pressures cool, today’s stop remained close to prevailing levels, suggesting limited concession was needed to clear the supply.
Investors who expect the Bank of Canada to pivot toward looser policy over the coming quarters continue to use two year paper as a clean way to express that view, while liability managers value the liquidity of the benchmark line.
The sale also reflects Ottawa’s larger plan for the fiscal year. The Department of Finance has signaled a heavier bond program in 2025–26, including more frequent auctions in the five and ten year sectors to manage borrowing more smoothly across the curve.
The program remains flexible to adjust for shifting funding needs and market tone, but regular reopenings of the two year anchor the government’s presence at the front end.
What the Metrics say
Coverage at 2.76 points to healthy demand, and the modest tail indicates pricing stayed tight to pre-auction levels.
The C$6.0 billion size is in line with recent taps of the same line, which cleared at higher yields in late August before a pullback in rates into early September.
With today’s reopening, the Nov. 2027s now sit at C$18.0 billion outstanding, which helps liquidity in futures delivery baskets and supports the Montreal Exchange’s two year contract complex.
The near term calendar remains busy. The Bank of Canada will conduct additional bond reopenings this month, including in the ten and thirty year sectors, which will further test investor appetite across maturities.
For now, the government can take some comfort from a well covered two year sale that met its funding target without straining the market.
Sources:
Bank of Canada, nominal bond auction results for Sept. 10, 2025. Bank of Canada
Department of Finance Canada, 2025–26 Debt Management Strategy. Canada.ca
Bank of Canada, bond auction schedule and September maturity totals. Bank of Canada
