Canada Premium Bond

Canada Premium Bond

A savings bond, issued by the Canadian government, with a fixed interest rate and a provision limiting redemption. That is, unlike Canada Savings Bonds, Canada Premium Bonds may only be redeemed at par once per year, within 30 days of the anniversary of issue. This protects the government from the risk that too many bondholders will redeem their bonds whenever interest rates rise. To compensate bondholders, however, Premium Bonds pay a higher interest rate than Savings Bonds from the outset.