The province will issue Alberta Capital Bonds to the public sometime early in the new year to raise money for seniors’ housing. It will be the first time since 1997 that the province has issued bonds to the public, said Alberta Finance spokesman Bart Johnson.
The bonds will be available for a limited time starting in mid-February, Johnson said. Purchases will be possible through financial institutions and investment advisors and will be restricted to Alberta residents. Final details such as interest rates will be provided closer to the issue date.
The first issue will be for $100 million, said St. Albert MLA Ken Allred.
“It’s a bit of a test market situation to determine if it’s really popular, then they might look at another issue,” he said.
The financial industry was concerned about the bonds competing with the private sector but those fears have been soothed, Allred said.
“I understand with the discussions they’ve had, that since it’s only a small amount, they’re not that concerned. If it were a billion dollars they might be quite concerned,” he said.
Allred thinks the bond issue is a good way for the government to move forward quickly on new seniors’ housing, but also called for caution.
“We’ve got to be a little bit cautious that we don’t go overboard on it from a competitive perspective as well as from a debt perspective.”
The Canadian Taxpayers Federation reacted to the news by saying that the government was simply putting a happy face on new debt.
According to Alberta Finance, the province first issued Alberta Capital Bonds in 1987, using the money to pay for capital projects and to help offset budget deficits. In 1993, the province stopped running deficits, but continued to sell the bonds.
In 1996, the name changed from Alberta Capital Bonds to Alberta Savings Certificates. By 1997, the Alberta government had raised $5.7 billion through the bonds and certificates, but stopped selling the certificates because it had developed even more cost-effective ways to raise money.
The last issues of Alberta Savings Certificates and original Alberta Capital Bonds matured on June 1, 2004. There are approximately $3.5 million in matured certificates and bonds that have not been cashed in by their owners.
