By Fergal Smith
TORONTO, Aug 17 (Reuters) - Canada, which issued its first ultra-long bond in April 2014, is considering more in the future, the government said on Thursday.
Any issuance would be done by reopening that 50-year bond via a modified auction, subject to market conditions, the government said on the Bank of Canada website.
The 2.75 percent bond, which matures on Dec. 1, 2064, had C$3.5 billion outstanding at the end of July. Canada last reopened the bond in November 2014 with a C$1 billion issue.
A strong 30-year auction on Wednesday may have reassured the government that the market would absorb issuance of the even longer-dated maturity, said Andrew Kelvin, senior rates strategist at TD Securities.
Canada is one of the few leading industrialized nations with an undisputed AAA rating, and its bonds are in high demand.
Canada's bond issuance has soared from C$93 billion in 2015-16 to a projected C$142 billion in 2017-18 as Prime Minister Justin Trudeau's Liberal government runs budget deficits to help spur an economy that fell into a brief recession in 2015 as oil prices slumped. The economy has been on the upswing this year and led the G7 in the first quarter.
The greater financing need could make it prudent for the government to spread its borrowing across the curve and to take advantage of historically low bond yields.
"Being able to lock in these sorts of yields over 50 years does make sense," Kelvin said.
The price of the 50-year bond fell 67.4 Canadian cents on Thursday to yield 2.287 percent.
Ultra-long bonds have a term to maturity of 40 years or more. A 50-year duration for sovereign bonds is not as common as a 30-year, although several Canadian provinces already issue ultra-long bonds.
Earlier this year, U.S. Treasury Secretary Steven Mnuchin said the United States was studying the possibility of issuing 50-year and 100-year bonds. Debt for both Mexico and Ireland has durations of up to a century.