* Bid-to-cover ratio of 2.5522
* Auction of 2014 bond yields average 2.022
* Auction not seen affecting Bank of Canada rate decision
(Adds details, analyst comments)
By Solarina Ho
TORONTO, March 23 Canada's sale of three-year
government bonds met with decent demand on Wednesday as
expectations grew that the Bank of Canada would leave interest
rates steady longer, following strong political opposition to
the Conservative government's budget.
There were more than C$8 billion in bids from primary
dealers, resulting in a bid-to-cover ratio of 2.5522.
The C$3.2 billion bond auction, due in 2014, yielded an
average 2.022 percent, slightly lower than the previous two
"It did attract decent demand. The bid-cover was pretty
strong ... That compares favorably to February and the recent
average for this auction," said Fergal Smith, managing market
strategist at Action Economics.
"The demand for Canadian auction has held up very well ...
I think it's being supported by the bank's patient stance on
policy and there's a lingering safe-haven bid in reaction to
The auction isn't seen having an influence on the Bank of
Canada, which is largely expected to raise rates later this
year. [CAD/POLL] BOCWATCH
Opposition parties have said they will vote against the
minority Conservative government's budget plan. That would mean
the government would fall and result in a federal election in
"The budget and May election have ruled out a spring rate
hike from the Bank of Canada. The market's been already pushing
back expectations to the second half of the year," said Smith.
The Bank of Canada said it bought C$480 million of the
issue for itself and on behalf of its clients. The bonds will
be issued March 25.
Details on Bank of Canada webpage:
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