A price near 71 for a Government of Canada bond looks arresting until the maths behind it comes into view. The 2.75% bond maturing on 1 December 2064 traded at roughly 70.855% of Face Value as at 15 September 2026, with an approximate current Yield of about 3.88% and a yield to Maturity of 4.315%. With about 38 years still to run, it is the longest-dated line in this group, and the combination of a low coupon and vast duration explains its deep discount. This article sets out why the price sits so far below face and what may move it.

What is this bond?

CA135087C939 is a nominal Government of Canada bond paying a fixed 2.75% annual coupon and maturing on 1 December 2064. The coupon is calculated on a face value of 100 — C$2.75 per C$100 of nominal each year, in two semi-annual instalments — and the government repays the C$100 face at maturity. The coupon rate is fixed and does not change with the market.

The bond is a direct federal obligation, and Canada holds ratings of S&P AAA, Moody’s Aaa and Fitch AA+. Its low coupon, combined with a residual life close to 38 years, is why it trades near 71% of face. Against the Bank of Canada’s long (30-year) benchmark yield of 4.28% on 11 September 2026, a 2.75% coupon falls well short, and over nearly four decades that shortfall weighs heavily on the price.

Why is this bond in focus?

The striking price draws attention, but the reason is structural. With about 38 years to maturity, this is one of the longest nominal Government of Canada bonds outstanding, giving it exceptional interest-rate sensitivity. Its low coupon means the market must discount the price substantially to lift the yield to prevailing levels. The result is a bond whose value moves dramatically with small changes in long-term yields.

It is not an official benchmark. The current 30-year/long Government of Canada benchmark is the 3.5% December 2057 bond (CA135087S703), effective 6 March 2026. The 2064 issue is off-the-run — traded actively but not the reference point for new long-end pricing, and it sits well beyond the 30-year benchmark maturity.

What are Canadian bond yields doing?

The Government of Canada curve was positively sloped as at 11 September 2026, with Bank of Canada benchmark yields running from 3.35% at two years to 3.95% at ten years and 4.28% at the long end — a normalisation from the inversion of 2023-24.

For a 2064 maturity, the long benchmark near 4.28% is the closest anchor, though this bond extends well beyond it. Its own yield to maturity of 4.315% (15 September 2026) sits a little above the long benchmark, consistent with its extra residual life at the very far end of the curve.

Interest rates and the Bank of Canada

The Bank of Canada held its overnight rate target at 2.25% at the 2 September 2026 decision, with the Bank Rate at 2.50% and the deposit rate at 2.20%. That level is regarded as within the estimated neutral range after earlier cuts. Governing Council said it is “prepared to adjust Monetary Policy as needed,” assessing the rebound and Inflation outlook without pre-commitment.

For a 38-year bond, the overnight rate has little direct bearing. It anchors the front of the curve, but the price of a 2064 bond is driven overwhelmingly by long-term expectations for inflation, growth and the term premium — the compensation investors require for lending across four decades.

Inflation and the economic backdrop

Statistics Canada reported headline CPI at 3.0% year on year for August 2026 (released 14 September 2026), unchanged. Core Inflation was near target, with CPI-trim and CPI-median both at 2.0%. Elevated gasoline, up 22.8% year on year, kept headline above core; CPI excluding gasoline ran around 2.4%.

Growth was firmer: real GDP rose 3.3% annualised in the second quarter of 2026, while Unemployment edged down to 6.4% in August 2026, with the Bank still describing labour Demand as subdued. For a bond maturing in 2064, the decisive issue is whether inflation stays anchored near 2% over the very long run, since decades of fixed coupons are only as valuable in real terms as inflation allows.

Coupon versus market yield

The gap between coupon and yield is at its widest here. The 2.75% coupon is fixed on the C$100 face and never changes. The Market Price — about 70.855% of face on 15 September 2026 — floats with prevailing yields. Because the coupon sits far below the roughly 4.3% yield investors require at the ultra-long end, buyers hold the bond only at a deep discount that closes that gap.

The approximate current yield of 3.88% divides the coupon by the discounted price. The yield to maturity of 4.315% goes further, folding in the pull-to-par: as 2064 approaches, the price is expected to drift back toward 100, and that large Capital accretion is counted alongside the coupons. Over nearly four decades, the coupon shortfall plus enormous duration mechanically drives the price far below face, while the YTM aligns the bond with the market. A price near 71 is arithmetic, not an assessment of value.

What could move this bond next?

Long-term yields dominate, and at 38 years the effect is magnified. Shifts in inflation expectations, the term premium and global ultra-long yields feed straight into the price. Supply is relevant: the Department of Finance plans gross bond issuance of about C$298 billion for 2026-27, against a federal Deficit near C$50 billion, sustaining long-bond supply and supporting the term premium.

Key risks to watch

Duration risk is extreme. A rise in long yields would cut the price sharply, amplified by the 38-year term more than in any other line here. Inflation surprises, a wider term premium, heavier issuance and moves in global long yields all pose downside price risks; falling long yields would lift the price. As an off-the-run line at the very far end, Liquidity can be thinner than in the current long benchmark.

What investors may watch next

The Bank of Canada’s next decisions fall on 28 October 2026 (with a Monetary Policy Report) and 9 December 2026. Investors will also track upcoming CPI and GDP data, the long benchmark yield and the federal borrowing programme, all of which shape where ultra-long yields, and this bond’s price, settle.