Ontario Premier Kathleen Wynne appointed a new cabinet today, making her deputy premier the head of the Treasury Board as Canada’s most populous province looks to close a C$12.5 billion ($11.6 billion) budget gap.
Deb Matthews takes over as Treasury Board President, while Charles Sousa remains Finance Minister, Wynne announced today at Queen’s Park, the provincial legislature in Toronto. Voters handed Wynne’s Liberal Party a majority mandate earlier this month after Sousa’s May 1 budget was rejected by opposition parties, triggering an election.
Today’s cabinet shuffle will be positive for Ontario bonds because it signals Wynne’s administration is serious about tackling the country’s largest deficit, according to Eric Lascelles, chief economist at RBC Global Asset Management.
“Optically the focus on the deficit has to be a positive for bond investors,” Lascelles said by phone from Toronto. His firm manages about C$335 billion worldwide, including Ontario bonds, which Lascelles said represented “reasonable value.”
“As much as the fiscal finances are not in perfect shape, it’s hard for me to fathom that any sort of fiscal premium would be warranted in the future,” Lascelles said.
The province’s 3.5 percent bonds due in June 2024 increased 36 cents to C$103.32, the first gain in four days, according to data compiled by Bloomberg. Yields on the bonds narrowed to 82 basis points relative to comparable federal benchmarks, versus 85 basis points on May 1.
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