Toronto, Jan 21, 2026, 10:46 (EST)
- On March 31, Constellation will lower the interest rate on its Series 1 debentures to 8.6% from the previous 8.9%
- The coupon is determined by the annual-average Canada CPI with an added fixed 6.5 percentage points
- Statistics Canada reported that Canada’s annual-average CPI climbed 2.1% in 2025
Constellation Software Inc announced it will lower the annual interest rate on its unsecured subordinated floating rate debentures, Series 1, to 8.6% starting March 31, down from the current 8.9%. The adjustment reflects the annual average change in Canada’s all-items Consumer Price Index for the 12 months ending Dec. 31, 2025, plus a fixed spread of 6.5 percentage points. 1
The Toronto market was active at the time of publication, shining a spotlight on a lesser-known slice of Constellation’s capital structure. Investors hold notes whose coupons rise with inflation, untouched by changes to the central bank’s overnight rate.
The slowdown matches a cooler annual inflation trend. Statistics Canada reported that Canada’s CPI increased 2.1% on an annual average in 2025, down from a 2.4% rise in 2024. 2
Constellation confirmed the new 8.6% rate will apply starting with the June 30, 2026 interest payment. The existing 8.9% rate remains effective until March 30.
Inflation remains uneven on the monthly tape. Statistics Canada reported consumer prices climbed 2.4% year-on-year in December, up from 2.2% in November. However, the CPI dropped 0.2% month-over-month, with the agency citing base effects tied to a temporary GST/HST break the previous year. 3
Economists told Reuters that the drop in core inflation measures should allow the Bank of Canada to hold rates steady. Andrew Grantham, senior economist at CIBC Capital Markets, noted the data remain “still consistent with underlying inflation being close to 2%.” Fitch Ratings director Jessica Hinds said the report is “highly unlikely to change the calculus” for the central bank. 4
A debenture is essentially a corporate IOU. When it’s called “unsecured,” that means there’s no specific collateral backing the debt. “Subordinated” indicates it sits below senior debt in line if the company goes under.
Constellation calls itself an acquirer and operator of vertical market software firms — specialized software designed for particular industries and essential daily tasks. 5
Yet the CPI connection works both ways. Should inflation ease more, the coupon will drop again at the next reset, tightening income for investors; if inflation picks up, Constellation’s interest expenses climb just as quickly.
