A wave of Government of Canada bonds falls due in 2027, and the 3.245% issue maturing on 24 August 2027 is one of them. Its comparatively high coupon, set when yields were higher, distinguishes it from many neighbouring bonds. As at 15 September 2026 it trades at 100.265% of face value, just above par, with a Yield to Maturity of 2.955% and roughly 0.9 years left to run. That combination makes it a clear example of how coupon and price interact as a bond nears repayment.

What is this bond?

Formally Canada Treasury Bonds 3.245% 24-AUG-2027, this is a conventional nominal bond issued by the Government of Canada under the ISIN CA135087P733. It pays a fixed coupon of 3.245% on a Face Value of 100 and is scheduled to repay principal on 24 August 2027.

The federal government carries ratings of AAA from S&P, Aaa from Moody’s and AA+ from Fitch. These reflect the Credit standing of the issuer, not the Market Price of the bond, which continues to move with prevailing interest rates.

Why is this bond in focus?

The bond’s relatively high 3.245% coupon marks it out. It was struck at a time of higher yields, and as a result it pays more in cash each year than many similar-dated Government of Canada bonds issued when rates were lower.

With around 0.9 years remaining as at 15 September 2026, it also belongs to the crowded cohort of 2027 maturities. For holders, the approaching repayment date sharpens the question of where to place proceeds once the bond matures.

What are Canadian bond yields doing?

The Bank of Canada’s benchmark Government of Canada yields, as at 11 September 2026, were 3.35% at the 2-year, 3.44% at the 3-year, 3.65% at the 5-year, 3.95% at the 10-year and 4.28% at the 30-year. The curve slopes upward, a normalisation from the inverted shape of 2023 and 2024.

This bond’s yield to maturity of 2.955% (15 September 2026) sits below the 2-year benchmark, consistent with its shorter residual life. A bond with under a year to run is priced nearer to short-term money-market rates than to the two-year point on the curve.

Interest rates and the Bank of Canada

At its 2 September 2026 decision, the Bank of Canada held the overnight rate target at 2.25%, with the Bank Rate at 2.50% and the deposit rate at 2.20%. The Bank has been on hold, having cut from higher levels earlier in the easing cycle, and views 2.25% as within its estimated neutral range.

Governing Council said it stood ready to adjust policy as needed, offering no pre-commitment. The next decisions are scheduled for 28 October 2026, with a Monetary Policy Report, and 9 December 2026. For a bond maturing in August 2027, these meetings matter mainly through the reinvestment rate that will greet holders at repayment.

Inflation and the economic backdrop

Statistics Canada’s Consumer Price Index for August 2026, released on 14 September 2026, showed headline Inflation at 3.0% year on year, unchanged. The Bank’s preferred core gauges were near target, with CPI-trim and CPI-median both at 2.0%, while CPI excluding gasoline ran around 2.4%.

Gasoline, up 22.8% year on year but decelerating, is the chief reason headline sits above core. Growth has firmed: real GDP rose at a 3.3% annualised rate in the second quarter of 2026, and the Unemployment rate eased to 6.4% in August 2026, though the Bank still calls labour Demand subdued.

Coupon versus market yield

This bond illustrates neatly why three yield measures can differ. The coupon rate is fixed at 3.245% of face value. The current yield, near 3.24% as at 15 September 2026, is the annual coupon divided by the market price. The yield to maturity of 2.955% is lower than both.

That gap arises because the price of 100.265 is slightly above par. A holder paying just over 100 for a bond that returns 100 at maturity gives up a small amount of Capital along the way, which trims the total return below the headline coupon. The premium itself reflects the fact that the 3.245% coupon is generous relative to the short yields now available at this maturity, so buyers pay a little more for that above-market income.

What could move this bond next?

With repayment less than a year away, the bond’s price is heavily tethered to the return of face value on 24 August 2027. Longer-dated bonds swing more with yield changes; this one moves far less.

Shifts in very short-term rates, shaped by the Bank of Canada’s October and December decisions and by incoming data, can still produce modest price movement. But the dominant force from here is the pull towards par as maturity nears.

Key risks to watch

Reinvestment risk is the most immediate consideration. When the bond repays in August 2027, proceeds must be redeployed at then-current rates, which could be lower than today’s.

Interest rate risk remains, with prices falling if yields rise, but the short residual life dampens its effect. Credit risk is limited given Canada’s AAA, Aaa and AA+ ratings. Inflation, with headline CPI at 3.0%, can still erode the real value of the fixed coupon.

What investors may watch next

The Bank of Canada’s 28 October 2026 decision and Monetary Policy Report, followed by the 9 December 2026 meeting, will guide expectations for short-term rates. Statistics Canada’s coming CPI and Labour Force Survey releases will feed into that view.

For a bond so close to maturity, the practical focus rests on the reinvestment landscape in August 2027 rather than on further price movement.