07:39 AM EST, 02/13/2026 (MT Newswires) -- Canadian provincial finance Ministers are looking at favorable borrowing conditions ahead of the 2026 provincial budget season that kicks off next week, said Bank of Montreal (BMO).

While long-term interest rates are still higher than they've been accustomed to over the past decade, provincial spreads relative to Government of Canada (GoC) bonds have tightened "dramatically," noted the bank.

In the 30-year space, they currently sit roughly 70bps back of GoCs, near the lowest levels of the past decade, pointed out BMO. That's also roughly 20bps tighter than this time last year.

There is clearly some variation among the individual provinces, added the bank. Ontario is setting the bar right now with the tightest spreads among the group.

British Columbia (fiscal performance) and Quebec (fiscal performance and political uncertainty) sit at the very wide end of their three-year range versus Ontario.

Alberta and Saskatchewan (best fiscal fundamentals) sit at the tight end.

Broadly, light issuance recently has helped tighten spreads, and the group has been active in non-Canadian dollar markets, which has taken some domestic supply off the table, added BMO.

For 2026, the bank could see deficits narrow, but borrowing will remain heavy.