Quebec bonds tighten as separatist party falls short of majority

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Photo by ANDREJ IVANOV/AFP via Getty ImagesThe separatist Parti Québécois won Quebec’s election but fell short of a majority government, a result that’s boosting investor confidence in the province’s bonds.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountQuebec 30-year bonds have tightened to about 7.5 basis points above the Ontario benchmark, compared with around 11 basis points prior to the election, according to data from Beacon Securities. The tighter spread indicates investors are now demanding a smaller risk premium to hold the debt.This advertisement has not loaded yet, but your article continues below.The PQ won 59 seats in Monday’s election, five seats short of a majority as votes were split among five parties.SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try again“Bond holders are relieved that Quebec voters kept the PQ on a long leash and that it will need to work with other parties,” said Derek Holt, head of capital markets economics at Bank of Nova Scotia. “A fragile minority will struggle to set the conditions to hold a deeply unpopular referendum on sovereignty.”The risk with a PQ government largely comes from party leader Paul St-Pierre Plamondon’s pledge to hold an independence referendum. Polls show most Quebecers don’t want to break away, but even a slight possibility of Quebec secession can be enough to rattle bond investors. A split with Canada, one of the world’s most creditworthy sovereign borrowers, would bring significant economic and fiscal upheaval.St-Pierre Plamondon has said government led by him wouldn’t hold a sovereignty vote until after U.S. President Donald Trump leaves office. The PQ’s minority status means the new premier and his cabinet will have to work with at least one other party to pass laws and budgets.—With assistance from Mathieu Dion.We apologize, but this video has failed to load.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.