Ottawa finances
What rising US 30-year yields mean for Ottawa’s books
September 29, 2026
US 30-year Treasury yields are around 5.60%. That is an American interest rate. Ottawa does not pay it. The question is whether the move still shows up on your tax bill, and by how much.
What that US number actually is
A 30-year Treasury yield is the interest rate investors demand to lend the US government money for 30 years. When it jumps, other long-term rates tend to follow: Canadian government bonds, Ontario bonds, then City of Ottawa bonds.
They have not followed one-for-one. Canada’s 30-year yield is about 4.30% today, up roughly two-thirds of a percentage point from a year ago. The US rate is about 1.3 points higher than Canada’s. Ottawa borrows off the Canadian and Ontario rates, plus a small extra charge because it is a city, not a country.
Canada’s 10-year yield touched a one-year high of about 4% on September 24 as US yields surged.
What Ottawa already owes
The number you usually hear is “long-term debt.” At the end of 2025 that was $3.69 billion. That is only part of the picture. These figures are from the city’s audited statements, approved by Council on June 24, 2026.
| On the books | End of 2025 | End of 2024 |
|---|---|---|
| Total liabilities | $8.98 billion | $7.93 billion |
| Net long-term debt (the figure usually quoted) | $3.69 billion | $3.37 billion |
| Housing mortgages | $637 million | $543 million |
| Employee pensions and benefits | $856 million | $802 million |
| Trillium Line private-finance deal | $129 million | $136 million |
| Net debt | $4.86 billion | $4.11 billion |
Sitting off those books, but disclosed in the notes:
- Up to $157 million of loan guarantees ($104 million outstanding), covering ice rinks, the paramedic headquarters, the Shenkman Arts Centre, the Lansdowne arena roof and Lansdowne 2.0.
- $277 million still to spend on the Confederation Line east and west extensions, plus $256 million the city must repay the private partner when those extensions are finished.
- Monthly Stage 1 LRT service payments through May 2048, partly tied to inflation. The statements do not give a dollar total.
- About $1.67 billion of contracted capital work, $1.46 billion of it due in 2026.
- Hydro Ottawa’s $2.40 billion of debts. The city owns the company but does not fold those debts into its own total.
The quoted debt number is real. It is just not the whole commitment.
What rising rates do — and do not — change
Think of the city’s debts like a mix of fixed-rate and new mortgages.
Does not reprice
- Most existing city bonds. Those rates are already set.
- The Trillium Line private-finance payments. Those are expensive — an effective rate of about 12.5%, versus the city’s own 4.6% — but they are also fixed.
- The Canada Infrastructure Bank bus loan, up to $380 million at 1%. Only $19 million was drawn at the end of 2025.
Does cost more
- New bonds the city sells this year and next.
- Old bonds that come due and have to be refinanced. About $180 million of principal is scheduled for 2026.
- New borrowing by Ottawa Community Housing. The city often covers those payments through subsidy, so the cost can land in the city budget.
In 2025 the city issued $470 million of new bonds, including a $250 million 20-year deal in November at 4.60%, and drew $18 million on the cheap federal bus loan. Net long-term debt rose by about $315 million.
The likely bill, in ordinary numbers
Long Canadian rates have risen about 0.6 percentage points since that November sale. A similar deal today would likely cost around 5.1% to 5.3%.
The city has told investors it plans to borrow about $300 million in the second half of 2026. The adopted budget tables show estimated new issues of about $366 million across tax, development-charge and police programs. Using the $300 million public figure, and an extra 0.6 points:
| If this happens | Extra cost |
|---|---|
| One year of city bonds, about $300 million | About $1.8 million a year, or about $54 million over 30 years |
| Plus housing borrowing at last year’s pace, about $114 million | Another $0.7 million a year, or about $2.5 million combined |
| Existing fixed-rate debt and the Trillium deal | No direct change |
| The 1% federal bus loan | Protected |
To put that in household terms: municipal taxes brought in $2.47 billion in 2025. An extra $2 million is less than one-tenth of one percent of that levy — a few dollars per household, not a tax shock by itself.
The city already paid $186 million of interest in 2025, up from $159 million the year before. Tax- and rate-supported debt payments were 4.7% of the city’s own revenues. Council’s own ceiling is 8.5%. There is room. The pressure is real, not urgent.
Why it still matters
Ottawa is in a building decade: LRT extensions, housing, buses, a new library, a police station. Each year of high rates is another layer on that pile. One year is small. Five years of borrowing at these levels is not.
Two other costs do not wait for interest rates. Stage 1 LRT service payments run to 2048 and rise with inflation. The Trillium private-finance deal is already much more expensive than city bonds. Those are built in, whether Wall Street yields go up or down.
What to watch next
- The 2026 bond sale: size, term, and the extra charge over Ontario.
- Whether the Confederation Line east and west extensions hit “substantial completion,” which triggers the $256 million repayment.
- How much new housing debt the city ends up subsidizing.
Rising US long rates are not about to blow a hole in Ottawa’s budget. They make the next round of city-building a little more expensive, on top of commitments that were already large. That is the effect that reaches city hall.
Sources
- City of Ottawa consolidated financial statements, December 31, 2025
- City of Ottawa report: 2025 consolidated financial statements
- City of Ottawa consolidated financial statements, December 31, 2024
- City of Ottawa: $250 million debenture issue, November 2025
- RBC Capital Markets municipal roundtable, 2025 (2026 issuance plan)
- Bank of Canada benchmark bond yields
- US 30-year Treasury yield
Yields as of September 29, 2026. City figures as of December 31, 2025. Extra-cost figures are estimates, not city forecasts.
The next council sits from mid-November 2026 to November 2030. Most of the rate effect in that term is not the US 30-year itself. It is Canadian long rates staying about 0.6 points above the city’s November 2025 print of 4.60%, applied to the new bonds Ottawa already plans to sell.
What the city itself plans to borrow
The 2026 capital debt model (tax, rate, development charges and gas tax) is the cleanest four-year window the city has published:
Year
Planned new issues
Extra interest per year if rates stay ~0.6 points higher
2026
$366 million
$2.2 million
2027
$550 million
$3.3 million
2028
$395 million
$2.4 million
2029
$400 million
$2.4 million
Four-year total
$1.71 billion
about $10 million a year by 2029
That $10 million is the running extra cost once all four years of new bonds are outstanding. It is not $10 million in year one.
If each vintage pays a full year of the higher rate after it is issued, the extra interest actually paid over 2026–2029 is roughly $22 million to $26 million in total. Mid-year sales would land at the low end of that range.
A 2030 budget is not in that table. Water/wastewater plans still show about $225 million of rate-supported debt that year, and the tax-supported long-range plan lifts the annual tax-debt cap toward $96.5 million. If 2030 looks like 2028–29, add another $2 million to $2.5 million a year by the end of the term.
Tax-supported issues alone are much smaller: $116 million, $160 million, $60 million and $35 million. The extra cost on that slice is only about $2 million a year by 2029. Most of the planned borrowing is transit, water and development-charge work, which hits rates and transit fares more than the property-tax levy.
What that means on a household bill
Municipal taxes brought in $2.47 billion in 2025.
• Year one extra (~$2 million): well under $5 per household.
• By 2029 extra (~
15–20 a year** on a typical municipal tax bill — if the whole increment were loaded onto property taxes, which it will not be.
The city’s own tables already have interest rising from $166 million in 2026 to $203 million in 2029 because they intend to borrow more. The 0.6-point market move is on top of that volume increase, and only if today’s higher yields stick.
What does not change over the term
• Bonds already sold. Those rates are fixed.
• The Trillium Line private-finance payments (effective rate about 12.5%). Fixed, and already expensive.
• The Canada Infrastructure Bank bus loan at 1%.
About $150–170 million of principal and sinking-fund payments come due each year. That is mostly paydown, not a full refinance at the new rate. The planned “new issues” line is the amount that will actually be priced in the market.
Wild cards in this term
Housing. Ottawa Community Housing added about $114 million of mortgages in 2025. Four years at that pace would add roughly another $2.5 million a year of extra interest by 2030, some of which can show up as city subsidy.
Confederation Line east and west. When those extensions reach substantial completion, the city owes the private partner $256 million. If that lands in this term and is borrowed rather than paid from cash or senior-government money, it is another ~$1.5 million a year at the higher rate.
It is unlikely but rates could fall. The estimate assumes the 0.6-point gap over the November 2025 deal lasts four years. If long Canadian yields drop back, the extra cost shrinks. If they rise further, it grows.
Bottom line for 2026–2030
Not a budget crisis. A slow leak.
By the end of the term, if the city borrows in line with its own tables and long rates stay where they are now, Ottawa is on the hook for about $10 million a year extra, plus a few million more if housing and the LRT completion payment are financed at the new rate. That is real money. It is also small beside an $8.98 billion liability pile and a $2.5 billion tax levy. The damage is from repeating that year after year, not from a single US Treasury print.
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