Among Canada’s ultra-long government bonds, the 3.75% issue maturing on 1 June 2059 carries one of the higher coupons, and that shapes how it trades. As at 15 September 2026 it stood near 90.235% of face value, with an approximate current Yield of about 4.16% and a yield to Maturity of 4.313%. With roughly 33 years still to run, its price sits closer to par than lower-coupon peers, yet it remains below face because even a 3.75% coupon falls short of today’s ultra-long yields. This article looks at why the bond draws attention and what could move it.

What is this bond?

CA135087U857 is a nominal Government of Canada bond paying a fixed 3.75% annual coupon and maturing on 1 June 2059. The coupon is calculated on a Face Value of 100 — C$3.75 per C$100 of nominal each year, paid semi-annually — and the government repays the C$100 face at maturity. The coupon rate is fixed and does not change with market conditions.

The bond is a direct federal obligation, and Canada carries ratings of S&P AAA, Moody’s Aaa and Fitch AA+. Its 3.75% coupon is the highest of the ultra-long bonds in this group, which is why it trades nearer par than the 2.75% and 3.5% long lines. Even so, against the Bank of Canada’s long (30-year) benchmark yield of 4.28% on 11 September 2026, a 3.75% coupon still falls a little short, leaving the price below 100.

Why is this bond in focus?

The bond attracts interest because it combines a relatively high coupon with extreme duration. At roughly 33 years, it is among the longest nominal Government of Canada lines, so its price is highly sensitive to shifts in long-term yields. The higher coupon cushions the discount somewhat but does not remove the interest-rate sensitivity that comes with such a distant maturity.

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 2059 issue is off-the-run — traded actively but not the reference point for new long-end pricing.

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. That upward slope marks a normalisation from the inversion of 2023-24.

For a 2059 maturity, the long benchmark near 4.28% is the anchor, though a bond maturing beyond 30 years sits slightly further out. The bond’s own yield to maturity of 4.313% (15 September 2026) is a touch above the long benchmark, consistent with its longer 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 remains “prepared to adjust Monetary Policy as needed,” assessing the rebound and Inflation outlook without pre-commitment.

For a 33-year bond, the overnight rate is an indirect factor. It anchors the front of the curve, but the price of a 2059 bond depends chiefly on long-term expectations for inflation, growth and the term premium — the compensation investors Demand for lending over three decades and more.

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 2059, the pivotal issue is whether inflation stays anchored near 2% over the very long term, since that governs the real value of fixed coupons far into the future.

Coupon versus market yield

Separating coupon from yield clarifies the price. The 3.75% coupon is fixed on the C$100 face and never varies. The Market Price — about 90.235% of face on 15 September 2026 — moves with prevailing yields. Because the coupon sits just below the roughly 4.3% yield investors require at the ultra-long end, the bond trades at a discount that closes the gap.

The approximate current yield of 4.16% divides the coupon by the discounted price. The yield to maturity of 4.313% adds the pull-to-par: as 2059 approaches, the price is expected to drift back toward 100, and that Capital accretion counts alongside the coupons. The discount is milder here than on the 2.75% or 3.5% long bonds because 3.75% is nearer today’s yields, leaving less ground for the price to make up. The discount is coupon-versus-yield arithmetic, not a verdict on value.

What could move this bond next?

Long-term yields dominate. Shifts in inflation expectations, the term premium and global ultra-long yields feed straight into the price of a 33-year bond. Supply is relevant too: the Department of Finance plans gross bond issuance of about C$298 billion for 2026-27, against a federal Deficit near C$50 billion, keeping steady long-bond supply that supports the term premium.

Key risks to watch

Duration risk is paramount. A rise in long yields would cut the price sharply, amplified by the 33-year term. 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, the bond may trade with less Liquidity than 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.