Canada Premium Bond (CPB)
A Canada Premium Bond (CPB) is a low-risk debt instrument issued by the Bank of Canada. A Canada Premium Bond (CPB) is a low-risk debt instrument issued by the Bank of Canada. While a Canada Savings Bond is redeemable at any time, a Canada Premium Bond was redeemable once a year. A Canada Premium Bond is a low-risk debt instrument issued by the Bank of Canada. It comes with a higher interest rate than a Canada Savings Bond (CSB) with the same maturity but can only be redeemed on its anniversary date or 30 days thereafter.
What is Canada Premium Bond (CPB)?
A Canada Premium Bond (CPB) is a low-risk debt instrument issued by the Bank of Canada. It comes with a higher interest rate than a Canada Savings Bond (CSB) with the same maturity but can only be redeemed on its anniversary date or 30 days thereafter.
Understanding Canada Premium Bond (CPB)
Canada launched the Canada Savings Bonds Program in 1946 as part of the country's financing efforts following World War II. The bonds were purchased via payroll deductions and about 16,000 employers participated. The program reached its peak in the late 1980s, at one point recording C$55 billion of outstanding retail debt. In 1998, the Canada Premium Bonds program was introduced.
The Canada Premium Bond (CPB) was a financial instrument which gave the government a way to manage its debt. The CPB also provided citizens with a tool for saving and investing. As with other types of government bonds, one appealing attribute of the Canada Premium Bond was its status as a safe and secure investment. However, Canada Savings Bonds and Canada Premium Bonds are no longer available for purchase as of November 1, 2017.
While a Canada Savings Bond is redeemable at any time, a Canada Premium Bond was redeemable once a year. It must be redeemed either on the anniversary of the issue date or within 30 days of that date. Once a CPB reaches maturity, it no longer earns interest. If a CPB is redeemed before it reaches maturity, the redeemer will receive the face value plus all earned interest as of the last anniversary of the issue date.
The arrival of other investment options in a competitive market made the Canada Savings bond program increasingly less cost-effective and profitable for the government. The government said dwindling bond sales and rising administrative costs did not make it financially worthwhile to keep the program going. Existing bonds will continue to earn interest until they are redeemed or reach maturity.
CPBs that are lost, or stolen, and have not reached their maturity date may be reissued.
Related terms:
30-Year Treasury
The 30-Year Treasury, formerly the bellwether U.S. bond, is a U.S. Treasury debt obligation that has a maturity of 30 years. read more
Advance Refunding
Advance refunding is the withholding of a new bond issue's proceeds for more than 90 days before using them to pay off an outstanding bond issue. read more
Bank Of Canada (BOC)
The Bank Of Canada is the central bank of Canada. It influences the country's economy and money supply. read more
Canada Savings Bond (CSB)
Canada Savings Bond is a financial product issued by the Bank of Canada, inspired by war bonds issued during World War I. read more
Debenture
A debenture is a type of debt issued by governments and corporations that lacks collateral and is therefore dependent on the creditworthiness and reputation of the issuer. read more
Debt Instrument
A debt instrument is a tool an entity can utilize to raise capital. Any type of instrument primarily classified as debt can be considered a debt instrument. read more
Fixed Income & Examples
Fixed income refers to assets and securities that bear fixed cash flows for investors, such as fixed rate interest or dividends. read more
Government Bond
A government bond is issued by a government at the federal, state, or local level to raise debt capital. Treasuries are issued at the federal level. read more
Maturity
Maturity refers to a finite time period at the end of which the financial instrument will cease to exist and the principal is repaid with interest. read more
Savings Bond Plan
A savings bond plan allows employees to purchase U.S. savings bonds directly through automatic payroll deductions. read more