Comment 34 for bug 1665698

Ok, that confirms my theory of new Openstack vs (too) old libvirt.
But IIRC UCA Newton should be Newton form openstack and virtualization bits from Yakkety Ubuntu release.
That would be libvirt 2.1.0-1ubuntu9.1

$ lxc launch ubuntu-daily:xenial xenial-uca-newton
$ lxc exec xenial-uca-newton -- add-apt-repository cloud-archive:newton
$ lxc exec xenial-uca-newton -- apt update
$ lxc exec xenial-uca-newton -- apt-cache policy libvirt-bin
libvirt-bin:
     1.3.1-1ubuntu10.8 500
        500 http://archive.ubuntu.com/ubuntu xenial-updates/main amd64 Packages

Ok so Newton UCA really has not Yakketies libvirt.
But you are running Ocata level code, so their the UCA version would run into the same not having a newer libvirt.
$ lxc launch ubuntu-daily:xenial xenial-uca-ocata
$ lxc exec xenial-uca-ocata -- add-apt-repository cloud-archive:ocata
$ lxc exec xenial-uca-ocata -- apt update
$ lxc exec xenial-uca-ocata -- apt-cache policy libvirt-bin
libvirt-bin:
  Installed: (none)
  Candidate: 2.5.0-3ubuntu3~cloud0
  Version table:
     2.5.0-3ubuntu3~cloud0 500
        500 http://ubuntu-cloud.archive.canonical.com/ubuntu xenial-updates/ocata/main amd64

Here we go.
Please don't ask me why the libvirt 2.1 is not in the Newton UCA, that is up to the Cloud Archives Teams reasons and decisions. But they are subscribed and can answer that.

That explains why we are not seeing the issue when using Newton (not having the Openstack change) nor with Ocata (has Openstack but also a newer libvirt) - both cases match.
A cross version usage is not supported by UCA as far as I know.

So if you are running "ocata-level" upstream you should switch to UCA-Ocata and things hopefully should just work.